Good day –
I hope everyone is having a great weekend – I have a question I am sure some folks here have run into previously.
Disclaimer here – I am pretty new to BP and have been enjoying searching around and getting feel for the place. I am very hands on in all aspects of my RE business and have always done my own taxes…
When you started investing in Real Estate, you were not a Real Estate Professional and were subject to passive loss limitations when you were doing your taxes.
These Passive Losses have grown and carried forward from year to year. As you have grown your RE business and holdings, you took the steps need or are now spending the time required to be correctly labeled as a “Real Estate Professional”.
What have you done, what are you supposed to do with the Passive losses you have carried forward year after year?
Using the tax package I am using, I am running into the following questions:
I get this popup from the tax package:
Special Steps
If this activity was a passive activity in a previous year and you're carrying forward losses from the activity to 2015, or if you sold or disposed of part or all of your interest in this activity or property used in the activity, follow these steps:
- Click Show Form and then Whole Form (or just Whole Form if the form is showing at the bottom of the screen).
- Scroll down to Part IV of the form, "At-Risk/Passive Activity Questions."
- Complete questions 5 - 7 as appropriate.
- When you're done, click Interview.
I have reviewed this part of the Rentals and Royalties Worksheet
My Questions are – using the scenario above”
- On line 6 – if you still have the property but are now a Real Estate Professional would that count as “disposing of the “Passive Activity””, and you should check that box?
- If you are supposed to check line 6 would you then copy the number in line 5 to both lines 7a. and line 7b. ?
Thank you very much – have a great weekend!
