Suspended Passive Activity Losses

[Fletcher Caulk]

Apologies for the basic question, but I haven't been able to find a clear answer online.

I'm selling my home and doing a 1031 exchange, and am filing a California Form 593-E (Real Estate Withholding -- Computation of Gain or Loss). For 'suspended passive activity loss', is this the same as "unallowed loss' on my federal tax return?

[Michael Plaks]

Originally posted by @Fletcher Caulk:

Thanks Michael and Brian! And yes Michael, it's my investment property in LA. 

One follow up question my title company just asked me: the reason I moved from that home is because of military orders, and I only lived there for about a year and a half. I read IRA pub 523 and my takeaway is that the I do not qualify for the primary residence exception (the '2 years living there in last 5 years' clause) because I didn't live there for 2 years total at any point. The exception seems only to apply to how recent you would have lived there, and that you'd have to live there for at least 2 years no matter when.

That would mean I still do need to do a 1031 to avoid paying taxes. 

Did I get that right? 

If you moved because of military orders, you still qualify, only with a lower maximum, which should not be a problem.

And you're still unclear about the use of the property. So it was your residence for 1.5 year, and then you moved out and started renting it? If yes, and you moved out less than 3 years ago - you're fine, no need for a 1031.