Passive Loss Carry-forward?
I recently heard from my accountant that in Calif., passive losses from rental property cannot be carried forward to offset active income in future years. Is this correct?
I recently heard from my accountant that in Calif., passive losses from rental property cannot be carried forward to offset active income in future years. Is this correct?
California does have some state income tax rules that do not exactly parallel the federal income tax rules.
The state could very well disallow passive loss offsets against active income, while the federal income tax guidelines permit them with certain limitations.
The state could very well disallow passive loss carryforwards, while the federal income tax guidelines permit them (called suspended passive losses). If so, then the state might not have the passive loss limitations that the federal income tax rules implement.
Ask your accountant to clarify the state rules. Consult another California tax professional for a second opinion.
Dave,
Thanks for the insight. I will research this further.