Submitted By: Betty
Answered: August 31, 2015 12:11 pm

I had rental property on which there were suspended passive losses. Then my child lived in the property for several years (personal use for which no rent was received). I just sold the property. Can I take the suspended passive losses?

Suspended passive losses become deductible in the year in which there is a complete disposition of the property in a fully taxable event to an unrelated party. The fact that the losses remained suspended during the years of personal use does not erase them; the losses become deductible in the year of sale without regard to passive activity income.

Tax Glossary

Active participation

Test for determining deductibility of IRA deductions. Active participants in employer retirement plans are subject to IRA deduction phase-out rules if adjusted gross income exceeds certain threshold.

More terms