Article Date:
August 2017

Word Count:



Passive Losses Don’t Destroy Your Tax-Favored Capital Gains

Do you have rental properties or other businesses that create suspended passive losses?


Note. Your suspended passive losses are those losses that you were not able to deduct in prior years because of the passive loss rules.


When you dispose of your entire interest in a passive activity (or group of activities if grouped) in a fully taxable transaction, you release the suspended passive losses from that activity.1


Say you have this situation:



$300,000 of long-term capital gain from the sale of your Pine Street rental property (this property is not grouped)


$100,000 of suspended passive losses from the Pine Street property


$200,000 of suspended passive losses from other rental properties


How do you benefit from the sale of your Pine Street property? ... Log in to view full article.

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