Reply To: Forms Needed For Sale of Investment Rental Property

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#4692
fairira
Participant

snargle,

Thank you for pointing out that a rental activity is a passive activity under Section 469. I accept that to be so but I don’t follow why that means it is not also an investment. Please help me understand why if a rental may not be both a passive activity and an investment.

ruth, in your Oct. 10 post re whether a rental property is a trade or business and not an investment, I saw the following at https://www.irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals

“Top Frequently Asked Questions for Sale or Trade of Business, Depreciation, Rentals

“> What forms do we file to report a loss on the sale of a rental property?

“Answer: Rental property is income-producing property and, if you are in the trade or business of renting real property, report the loss on the sale of rental property on Form 4797, Sales of Business Property. . . . If your rental activity does not rise to the level of a trade or business, but instead is held for investment or for use in a not-for-profit activity, the loss is a capital loss.”

The point here is that the IRS does recognize that a rental activity may not rise to the level of a business or trade but instead may be held for investment which is the case as outlined in my 2 previous posts. In turn, Form 4797 (Sales of Business Property) should not be necessary.

snargle, ruth or anyone else, I welcome and appreciate your comments.