Tax liability -urgent question- thanks!

[Sue Jing]

I am currently doing 1031 exchange, and looks like we won't be able to close one of the properties we exchanged. The 180days closing deadline is next week.  It's a long story, how we get to this point. 

My question is, for the capital gain we get with this exchange, Can you claim the loss we had from previous yr and the other properties against it to decrease our tax liability? Do it matter if we are considered as real estate professional? 

Thanks for all your response!

[Derek Peterson]

You should definitely check with your CPA with all the details to get your definitive answer.  However, I will make some assumptions here.  First, it does matter whether you are considered a real estate professional or not, but since this deal seemed to be qualified for a 1031 exchange, I will assume that it was considered a capital investment where you received or intended to receive passive rental income, generally speaking.

So if you fully disposed of the property during the year, under IRC Sec 469(g), you should be able to deduct passive losses that you have carried forward against the capital gains on the sale of the property.