1

I recently sold my condo with carryover loss exceeding $100,000. Can I use that loss to offset the distribution from an IRA account(regular income) during the same year? I am 66 years old.

The condo was rental property and it was sold in 2014.

3

Property for personal use cannot be sold at loss for tax purposes. I.e.: if the condo was the one you lived in, and not in investment/rental property, then that loss is useless for tax purposes and cannot offset any other gain or income.

If the condo was a rental/investment, then the loss is considered capital loss and can offset capital gain. You can only use up to $3K of capital loss to offset ordinary income (which the IRA distribution is). Any unused loss can be carried forward, so if you don't have any capital gains - it will take you about 30 years to deduct the whole $100K loss.

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0

Yes. If a rental property has a loss, if you sell at a lower price than you paid, or when there are years of losses carried forward (due to the $50K/$100K MAGI restriction) which leave with a loss at the time of sale, the full loss applies when the property is sold.

To be clear, once everything is accounted for, e.g. cost of sale, depreciation, etc, a net loss will apply and can be taken against ordinary income. That's a great time to get tax software before year end, and see that you might use a Roth conversion to take advantage of the loss, i.e. offsetting the 'income' from the conversion with the loss, or to keep from dropping to a low bracket. Why let a loss offset income that might otherwise be taxed at 12%, when the conversion can be used up at a higher bracket?

As noted in my comment on the other answer, the IRS link shows it to be wrong. I just failed to return and post my own answer 4 years ago.

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