Discussion:Sale of Rental Property to related party

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Bjeter (Talk | contribs)
(I wouldn't think)
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Revision as of 13:37, 7 November 2009

Discussion Forum Index --> Tax Questions --> Sale of Rental Property to related party

Syma (talk|edits) said:

6 November 2009
My client is planning to sell his rental property to his brother at the Fair Market Value. The sale of rental property will result in a gain of 45K, however he has carryover passive activity loss from prior years for 40K. Does anyone know the characteristic of the gain? Is it a passive income or ordinary income? Can I offset the gain with the carryover passive activity loss? Please keep in mind it's a related party transaction. Any suggestions?

Bjeter (talk|edits) said:

7 November 2009
I wouldn't think the passive losses would be allowable until the brother disposed of the property to an unrelated party. Otherwise, you could just transfer property within a family to free up passive losses. I don't have a cite for this, just a gut feeling based on other related party situations.
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