Sale of rental at a loss

[taxdan]

I would just like to make sure I'm doing this correctly as it generates quite a huge loss for the client.

They purchased a prin residence in Oct 2008 for $825K. They moved and converted the property to a rental in March 2011. At this time the FMV was $751K.

The home was sold in May 2012 for $646K.

All values were broken down between land and building for depreciation purposes and there were some PAL carried forward to 2012.

Since this is a complete dispostion of a passive activity, they have a rather large deductible loss...no NOL as they have enough wage income to offset. I used FMV at time of converting the property to rental plus the usual expenses of sale as the basis...less depreciation of course.

Does this sound correct? I'm not sure if I did this right since it was first a prin residence.

Thanks so much for the input!

Dan