rental income loss

[corinnerichard]

Client is renting out a condo in another state they claim all rent and expenses, had a 14,000 loss  however they make over $300,000 married filing jointly and the loss is not being allowed  they actively participate in the decision making, they do not ever use the condo for their own use, strictly rental,  is that because they make too much money? If so please explain  thanks

[sjrcpa]

The $25,000 exception to the passive loss rules for active participation only apply to those with AGI under $150,000.

[PATAX]

Sjr is correct .... I also believe that the unused rental loss is carried forward... But I may be wrong... Just my opinion

[corinnerichard]

Just to be on the same page, so irs does not allow any loss on the schedule e rental since they make over $150,000 and married filing jointly?  confusing can you clarify or point me in the right direction.  thank you again.

[PATAX]

I just completed one about a month or so ago married filing joint made well over 150k, no loss allowed for the rental property... Hope this helps

[qbteachmt]

"can you clarify or point me in the right direction."

Have you used the Web? My favorite articles lately are Investopedia:

"What Is the Rental Real Estate Loss Allowance?

The rental real estate loss allowance is a federal tax deduction available to taxpayers who own and rent property in the U.S. Up to $25,000 may be deducted as a real estate loss per year as long as the individual's adjusted gross income is $100,000 or less. The deduction phases out for individuals earning between $100,000 and $150,000. People with higher adjusted gross incomes are not eligible for the deduction.

The deduction is available only to non-real estate professionals who own at least a 10% interest in a rental property that they actively manage and that operates at a loss during a particular tax year."

https://www.investopedia.com/terms/r/rentalreal-estate-loss-allowance.asp

"Property owners with modified adjusted gross incomes of $100,000 or less may deduct up to $25,000 in rental real estate losses per year if they "actively participate" in the rental activity. You actively participate if you are involved in meaningful management decisions regarding the rental property and have more than a 10% ownership interest in the property. This allowance is phased out for taxpayers whose MAGI exceeds $100,000 and eliminated entirely when it exceeds $150,000. Thus, it is useless for high-income landlords."

https://www.nolo.com/legal-encyclopedia/can-you-deduct-your-rental-losses.html

"Those who make $100,000 or less may be able to use the $25,000 annual rental loss allowance, which allows you to take that amount in losses each year. That allowance begins to phase out once your adjusted gross income exceeds $100,000, going away completely when your income tops $150,000."

https://finance.zacks.com/rental-property-losses-come-off-taxable-income-8060.html

[PATAX]

Great post QB👍

[qbteachmt]

Thanks, but the only credit I deserve is for Copy-and-Paste. That's my secret power.

[sjrcpa]

@PATAX Yes unused losses carry forward.

[sjrcpa]

@corinnerichard This is basic passive loss stuff. Start by looking at Form 8582 and its instructions.