Greetings!

Question

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I have a client with substantial losses on rental property that cannot be written off due to his AGI level.

The client does not want to sell the property.

Has anyone dealt with this before and have suggestions that will enable the client to use those losses?

flag	asked Oct 23 at 19:57 TaxQueries♦♦ 1,660●4●16

Brent Berkman · Accepted Answer · 2009-10-23 21:28:32Z UTC

Passive rental losses are suspended as a result of not having "passive income", not having active participation, or "actively participating" in the activity, but having modified adjusted gross income in excess of $150,000 (does not include filing status of married filing separate.)

Suspended passive losses are carried forward until they can either be offset with passive income, modified adjusted gross income decreases provided there is "active participation", or the activity is disposed of.

Accordingly, in order to utilize these suspended losses, the client would need to invest in an activity that produces "passive income", or just "sit tight" and utilize them upon final disposition or sale of 100% of the interest in the activity.

MassCPA · Answer 2 · 2009-10-26 13:40:56Z UTC

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Thank you for the response. That is the same conclusion I came to but was hoping I was missing something.

answered Oct 26 at 13:40

MassCPA
21●1

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My pleasure! It never hurts to confirm thoughts! – Brent Berkman Oct 26 at 13:42

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At least he can use them eventually. Yes, never ever hurts to have a second pair of eyes or simply walk away from a question and then the light bulb comes on :) – SandySea Oct 26 at 15:22

Suspend tax losses

2 Answers