Passive Gains/Losses across Multiple Properties

Member since 2024 · 158 posts · 87 votes

First year doing my taxes with rental properties. I have 4 rental properties. 3 properties have a ~$2000 loss and 1 property has a ~$2000 gain. In this case can I net the losses and gains together for an overall ~$6000 loss to carry forward or do I have to pay taxes on the one that has the gain? My CPA is saying I make too much money (W-2) to take any losses.

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Aaron ZimmermanBusiness Member

Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes

7mo

Yes you can offset the passive gains with passive losses. If you make >150k with LTRs or MTRs, then any losses that don't offset passive income will roll to future years.

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Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
7mo
Quote from @Allison Park:

First year doing my taxes with rental properties. I have 4 rental properties. 3 properties have a ~$2000 loss and 1 property has a ~$2000 gain. In this case can I net the losses and gains together for an overall ~$6000 loss to carry forward or do I have to pay taxes on the one that has the gain? My CPA is saying I make too much money (W-2) to take any losses.

Let me start by stating something obvious: if you feel a need to double-check your CPA's opinion online, you probably need a different CPA. :)

That said, you and he are saying the same exact thing. Yes, you do have a total $6k loss in your example. After offset against the $2k gain, it is a $4k net loss. And yes, as your CPA said, you cannot "take it" i.e. apply it to the current year. Which means that, like you said, it is carried forward.

He did not say that you could not offset the $2k gain.

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Allison Park
OP
Member since 2024 · 158 posts · 87 votes
7mo
Tried to update my post but it wouldn't let me. I am using Turbo Tax with expert support. I connected with another support expert and they were able to resolve the issue. I had to make an update to an entry in the form that was not clear. Anyway, problem is fixed.
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Aaron ZimmermanBusiness Member
Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
7mo
Yes you can offset the passive gains with passive losses. If you make >150k with LTRs or MTRs, then any losses that don't offset passive income will roll to future years.
[email protected]
Brick House CPAs53 Reviews
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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
7mo
@Allison Park

Hi Allison, are you saying your CPA is through turbo tax? When you start investing in rental properties you need a CPA who has experience with real estate investors. You are looking for your taxes to be done correctly and the knowledge to take advantages of the tax code. You will also want to get tax strategy which is different then just having taxes done. A CPA who is also an investor is the best way to go. Listen to CPA’s like @Aaron Zimmerman and @Michael Plaks.
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- Allison Park
  OP
  Member since 2024 · 158 posts · 87 votes
  7mo
  Quote from @Kenneth Garrett:
  
  @Allison Park
  
  Hi Allison, are you saying your CPA is through turbo tax? When you start investing in rental properties you need a CPA who has experience with real estate investors. You are looking for your taxes to be done correctly and the knowledge to take advantages of the tax code. You will also want to get tax strategy which is different then just having taxes done. A CPA who is also an investor is the best way to go. Listen to CPA’s like @Aaron Zimmerman and @Michael Plaks.
  I was about 50/50 if I would hand it over. I did look for a CPA with real estate specialty, but was not impressed. I got quoted $2500 from one for just tax prep which just seemed like they were trying to completely take advantage of me. I have been doing my own taxes for 25 years and using TurboTax for the last 10 or so. It is much simpler to be able to just import everything. If I used a CPA it would be much more expensive and more work for me. I met with a tax attorney and CPA earlier this year and didn't really tell me anything I didn't already know. I emailed him to see if he was available and he never responded, so I am just going with Turbo Tax. If I could find someone who could just go over the Real Estate forms, I would do it, but can't find anyone.
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- Aaron ZimmermanBusiness Member
  Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
  7mo
  @Allison Park candidly, you're likely not going to find someone that can do that. The risk is not the reward for most CPAs
  [email protected]
  Brick House CPAs53 Reviews
  Website View Page
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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
7mo
@Allison Park
I totally get where you are coming from. You did say it was your first time filing with rental properties. Unfortunately, you have not had a good experience finding tax expertise outside of Turbo Tax. When I started stacking properties using an experienced CPA actually saved me money even though the cost was about $2000. The things I didn’t know became obvious and to be honest I hate taxes. I do not even like gathering documents, but I learned how to track expenses way better and document hours for REGS, mileage, rehab etc.
Best of Luck.
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Fulton Abraham Sanchez
CPA| New Clients Welcome| 50 States · Member since 2016 · 430 posts · 93 votes
7mo
@Allison Park, hi. Rental properties are generally treated as passive activities, so gains and losses are usually netted together. In your case, the properties would combine into an overall passive loss. However, if your W-2 income is above certain thresholds, passive losses can’t offset active income and are instead suspended and carried forward. That likely explains your CPA’s comment. The loss isn’t gone, it’s just deferred under the passive activity rules.

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