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.

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Tax Glossary

Estimated tax

Advance payment of current tax liability based either on wage withholdings or installment payments of your estimated tax liability. To avoid penalties, you generally must pay to the IRS either 90% of your final tax liability, or either 100% or 110% of the prior year’s tax liability, depending on your adjusted gross income.

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