Rental Property converted to 2nd home

[bryce]

I have a client who has two rental properties. The first is a long term rental that generates about $5k of income per year. The 2nd is a short term vacation rental that has a suspended loss of about $30k still on the tax return. The client is going to stop renting it and convert it to a 2nd home.  

My understanding is the $30k suspended loss can remain on the tax return even though the home is being converted to a 2nd home.  Where in Proseries does this $30k suspended loss get entered so that it remains on the return going forward?  I was planning to remove the SCH E since it's no longer rented. Maybe I can just remove the asset cards so no more depreciation is reported going forward and leave the suspended loss on the SCH E? or? 

Thanks!

[TaxGuyBill · Accepted solution]

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@bryce wrote:

is a short term vacation rental that has a suspended loss of about $30k still on the tax return.

Where in Proseries does this $30k suspended loss get entered so that it remains on the return going forward? 

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Are these Passive Losses?

So the taxpayer did not Materially Participate in that rental?  If there was Material Participation, a short-term rental would usually not be passive.

In answer to your question, ProSeries is negligent in this regard, and you can't do it.  You either need to not file the 8582 (which is wrong), or continue to file a fake rental property (which is also wrong) in order to include the 8582 for the property.

[bryce]

Correct, passive losses. He does not MP in the rental. 

Is leaving on the "fake schedule E" with no income/expenses less wrong???  🙂

[sjrcpa]

I think the bogus Schedule E is less wrong, FWIW.

[Just-Lisa-Now-]

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@sjrcpa wrote:

I think the bogus Schedule E is less wrong, FWIW.

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I agree.   Thats really the only way to do it in ProSeries to get the 8582 to carry along.  Ive got a couple of these, I dunno how else to do it.