Can I offset capital gain with rental operating loss?

[Wei Xie]

Dear fellow BPers, I am wondering if I can use accumulated rental operating loss to offset capital gains: 1. Gains from sales of rental properties, either related to the operating loss or not. 2. Gains from sales of stocks or bonds, etc. I own the rental property directly under my name. Btw, will the situation change if the rental property is owned within an LLC or corp? Thank you all in advance!

[Brandon Hall]

@Dave Toelkes the question was whether he could use passive losses from real estate activities to offset capital gains from stock sales or rental the sale of a rentals. The answer is that you cannot use passive losses to offset capital gains from stock sales. You can use passive losses to offset the gain from the sale of a rental.

To answer your specific question, yes if you sold a rental property at a gain, it is a section 1231 gain and is reported ultimately on schedule D. It would offset other section 1231 losses. But passive losses from rental real estate are not section 1231 losses and are not reported on Schedule D.