I am 85 and have had this carryover for several years.( was higher some years ago) but currently can only deduct 3K per year. I want to sell a income property I own..will I be able
to deduct the full 80K from the profit of that sale? I have rec’d conflicting answers from CPA’s.
Terry Says: Well, I don’t want to play tax advisor, so let me say that “in general” the sale of your income property would create a capital gain — and as such could be offset by your tax loss carry forward. However, the specifics of your situation may be different — depending on how you depreciated the property (if you did) over the years, and the amount of your gain (based on capital improvements you may have made to the property). And your gains may be subject to the fairly new Net Investment Tax (set up to fund Obamacare) which could add an additional 3.8% tax if your income is above $200,000 ($250,000 on a joint return).
And then there’s the whole strategic question of whether you want to do the offset now (when capital gains taxes are relatively low) compared to potential higher rates in the future — depending on the election. And there’s also an issue of estate planning. If you die and leave this investment to a beneficiary, then no tax would be due (under current law), but the beneficiary would get a step-up in “basis” (cost) to the value at the date of your death. So you might want to consult your estate planning attorney as well.
So, I don’t know who you asked — but this is a lot of money and you don’t want to get it wrong. Get another opinion — and not from a storefront tax preparer, but rather a CPA who specializes in real estate transactions.