1

I will have a profit on one rental property and a somewhat smaller loss on another one. Will the loss on the second be deducted from the gain on the first before determining capital gains?

Do they need to be sold in the same year? (I am assuming that answer would be yes - but just checking).

4

Yes, just like any other capital gains, they will offset, assuming they are sold in the same year. Note that with rental real estate you will pay depreciation recapture, and your basis is lowered by the depreciation, which makes it more likely that you'll have a capital gain.

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