suspended losses from rental property in another state - Spidell

suspended losses from rental property in another state

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Message Board suspended losses from rental property in another state

This topic contains 1 reply, has 2 voices, and was last updated by Lynn Freer 4 months, 2 weeks ago.

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  • #151227
    Brett Greenig
    Participant

    I have a client that was an Arizona resident with an Arizona rental property for several years. He built up suspended losses for quite some time and then moved to California in 2017. In 2018, he sold the rental property as a California resident. Of course the Franchise Tax Board would like to view the gain as taxable income. My question is the following:

    Is there a way for California to allow all of the prior suspended Arizona losses, or are they just forfeited? It seems unfair to just lose them, but I can see California’s argument that those losses were not from a California sourced asset and so the losses are unrelated to California taxes too.

  • #151288
    Lynn Freer
    Participant

    See FTB Pub 1100. If the taxpayer is a resident, they can take all losses incurred before and during residency. They are treated as if they were always a resident.