Subject:  question about taxes
Date:  Thu, 19 Dec 2002
From:  Ellen

This is my question. My husband had a temporary one year job. We rented out our primary residence temporarily before we moved and sold the house. Because of heavy expenses, we have a passive loss on our residence. We did not take any depreciation.

My question is whether this was a primary residence. Can we deduct any of the mortgage interest or property taxes on Schedule A, even though it was rented for virtually all of the time?

Thank you.
Ellen

Answer

Date:  Fri, 03 Jan 2003

Hello Ellen,

No. The information should be reported on Schedule E, Part I. Since you sold the residence, any suspended passive activity losses are deductible in the year of the sale. I highly recommend that you get professional help in preparing your tax returns in this situation.

Good luck!
Mike Gray

We have more answers to frequently asked real estate tax questions! We also offer up-to-date information about new tax real estate tax developments in Michael Gray, CPA's Real Estate Tax Letter.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this website was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.