loss carryover rules?

4 Replies

I just bought a STR in Decemberof 2020, but rental season does not start til May/June.
So all I have right now are losses.
Can I carry over the 2020 losses to 2021 and use them once I have rent income?
Adam

Originally posted by @Adam Skwersky :
I just bought a STR in Decemberof 2020, but rental season does not start til May/June.
So all I have right now are losses.
Can I carry over the 2020 losses to 2021 and use them once I have rent income?
Adam

If your losses are not otherwise limited, you don't have to carry over the losses. You could potentially offset your other income via 2020 losses. Your post is not detailed enough for us to help you. 

What is your household income? Are you actively involved in this activity? Do you own more than 10%?  Do you qualify as RE pro status? Do you have other sources of income? So many questions need to be answered. 

 

@Ashish Acharya , I cannot use the losses this year because my income is too high and I have no income from the rental yet. Also I do not have  RE pro status. Property has a management office taking care of rentals.

You can assume I am right about not being able to deduct this year, can you tell me if I can still carry it over once I have rental income?

Originally posted by @Adam Skwersky :

@Ashish Acharya, I cannot use the losses this year because my income is too high and I have no income from the rental yet. Also I do not have  RE pro status. Property has a management office taking care of rentals.

You can assume I am right about not being able to deduct this year, can you tell me if I can still carry it over once I have rental income?

If your return is done correctly, your losses will carry forward to next year and could potentially offset other passive net income. You have to have net passive income to utilize your suspended losses (unless active participation exception applies or RE pro status applies )

 

I imagine that if you bought this property in December and "rental season does not start til May/June", it's very possible the property was never put into service during 2020 and would have minimal, if any deductions attributable.

Also, most STRs are not rental real estate for the passive activity loss rules.  Read: being a real estate pro or not is inconsequential.  Good for a discussion with your tax advisor.