Carryover losses on rental properties
06 July 2018
I have a rental property that I have losses on each year due to I am married and have to file as SINGLE. If I were to incorporate to a business would I be able to claim those carry over losses?
I was married 6 years ago and so far I have a total of $61K on losses. I cannot file married cause my husband was in trouble with IRS. It will be 5 more urs before I may be able yo claim status as married.
Will this tax law chamge on 2018??? I have been told that as long as I claim single.. I camt claim losses
until I sell the property.
Did tax law change for cases such as mine OR if I LLC would I be able yo claim my carryover losses. I am retired and make less than $100K a yr.
Thanks for your question. We avoid providing specific tax advice in the forum because taxes are so dependent on individual circumstances. For tax advice, we would recommend that you contact a licensed professional who can review your specific case and provide more concrete guidance.
In your particular case, whether you could claim tax-loss carry-forwards would be based partly on whether you own your rental properties personally, in a partnership, or whether your husband owns any part of the properties.
Also, from you’ve outlined above it’s difficult to tell whether the losses that you mention are operating losses (which may be deductible from income) or capital contributions to pay mortgages or other expenses. If these are capital contributions, then they are contributing to your cost basis in your properties and you won’t incur losses until you sell.
At this point, it doesn’t sound like you could benefit from switching to an LLC – not without considerable cost to have an attorney or accountant help you with the process. Once you purchase property and choose a tax treatment (as your properties have been treated one way for 5+ years) it’s pretty difficult to change course and claim a different tax treatment.
I hope this helps. If you have additional questions or want to try moving your properties into an LLC or other entity, we would recommend contacting an accountant to understand the specific steps you’ll need to take.