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I am asking this question in anticipation of doing my 2003 taxes next year and I have not seen an answer on this board. If I have more than $25k in passive activity losses ("PAL") from rental real estate, I know that I have to carry them forward to future years. But what happens to those carried-forward PALs when I sell the property? Do they offset capital gain on the sale? If so, am I limited to $25k or can I take all carried-forward PALs at the time of sale?

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