Residential rental property depreciation?
You're allowed maximum loss of 25k on your rental property. I had losses totaling 26k (7k of which was due to depreciation).
Is it possible to roll over 1k of the depreciation to next year?
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Greg,
Your understanding is correct. All unused rental losses are carried forward. This is done on form 8582, and I caution you to not attempt this form by hand. Must use tax software. As a bonus, the next year's software will automatically pick up the carry-forward.
The software will also correctly calculate your maximum allowed loss. Sometimes, particularly if your family income exceeds $100,000, the limit is less than $25,000. And in some rare cases, it's more than $25,000.
Michael Plaks, EA, Houston TX
Specializing in Real Estate tax law
www.MichaelPlaks.com
2
Unless the person you rented to LIVES in the property, it's not a residential rental.
I'm no tax person but someone I do books for owned an apartment building. He had a huge loss and they took part of it off his basis in the property. That's all I know.
When you do the form 8582, the amount of loss you can carryforward will be shown. It doesn't have character beyond being a passive loss that moves that form.
depreciation is applicable to the year it is appropriate
your limit of $25000 is a passive loss and if the depreciation makes up that loss, there is no separating it out to determine any carryover
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