Can R/E Losses on a property be used to offset Profits from another property?

6 Replies

Hi,

I’m having a tax discussion with my accountant, and I just want to double check that he’s got it right, so I thought I would reach out to the BP community!

If I own 3 SFHs as rentals and two of them produce profits that need to be reported for tax purposes (basically, rental income collected is higher than all expenses and depreciation) and the 3rd property has losses to report, can the losses on the 3rd property be used to offset the income of the other 2 properties?

What about accumulated losses from prior years? Can accumulated losses from a property be used to offset income from a different property?

Thanks so much!

Sure.   My schedule E (for personally owned rentals) nets out all gains and losses at the bottom.  The only number that transfers to your 1040 is the net.  Now to get that one property in the black, right?!  

Thanks Steve, I appreciate your response!

depending on your income, losses can be taken in the current year or carried forward to offset future income or used when you dispose of the property. 

Thanks Ben.  What about accumulated losses on a property from prior years?  Can they be used to offset gains from a different property on my tax return?

The answer is yes.  When you have passive rental real estate losses that you cannot use in a given year then you can carry forward those losses to future years where they can be used to offset passive income generated, including income generated from other properties.

Perfect, thank you Paul!

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