What's the quick and dirty on carrying forward tax deductions?

Question

I'm building my real estate portfolio but have no traditional income. I will be getting a W2 job again in a few years, and wanted to know if I can carry over my unused deductions from previous years? Where can I find the specifics on what carries over and for how long it is eligible?

Thanks in advance.

Michael Plaks · Answer

@Tyler D'Alessandro

The quick and dirty to this question? Here we go: Yes. Cannot make it any quicker or dirtier. ;)

If you allow it to be just a little bit longer & cleaner: if your RE business generates what is known as a "net operating loss" - you can currently choose to carry it either 5 years back to 2015 or forward to 2021 and beyond.

Basit Siddiqi · Answer

@Tyler D'AlessandroYou should consult with your accountant to see what losses are carried forward to 2020.There are specific forms normally that keep track of losses that get carried forward.You can have potentially a NOL carryfoward, Capital loss carryforward or even passive loss carryforward.

David M. · Answer

@Tyler D'Alessandro

Other than @Greg O'Brien clarification question, I thought you might be asking about Net Operating Loss carryforward which I believe is in IRS Pub 536. If you haven't had W2 income, I assume you have some other cash or 1099 business. So, you have some active deductions / business costs. If you are net negative income, you can carry forward those losses to future years. I believe the TJCA stopped the carry back for 2017 and earlier. Again, this is for "active" income/losses, and I'm not an expert at it.

That being said, yes, some additional clarification on your end would be helpful to zero in an answer for you.

Greg O'Brien · Answer

Hi Tyler - do you mean passive activity losses? What type of carryover losses are you referring to (capital, passive, charitable etc)?

What's the quick and dirty on carrying forward tax deductions?

4 Replies