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Rental property

Level 3

I HAVE HAD previous discussion on this issue.  I just need to understand why t/p expenses are being disallowed due to Passive Activity Limits and At-Risk Rules.  T/p actively and materially participated in obtaining and maintaining this property from the date of purchase-August 2022.  T/P did not get a renter until April 2023.  It just seems to me like a lost adventure.  Reading the Residential Rental Income and Passive Activity /At Risk rules seems not encourage investment in rental property.  I know that this is the last tax deadline day.  Help!


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4 Comments 4
Level 15

@moonpetty58 wrote:

I just need to understand why t/p expenses are being disallowed due to Passive Activity Limits


Because that is how Congress wrote the law.  Passive Losses are not not allowed, unless they can offset Passive Income.

There is an exception for real estate rental (up to $25,000) if (a) the taxpayer actively participates in it *AND* (b) their Modified AGI is under $150,000.

Any disallowed losses are carried forward (see Form 8582) and can be used whenever there is passive income (or when the property is sold in a fully taxable transaction).


Level 11
Level 11

What @TaxGuyBill said…. Look at their income and the passive activity loss limitations

If at first you don’t succeed…..find a workaround
Level 15

Are you asking about the limit on losses when the client's income exceeds $150K, or about the expenses before the property was available for rent?

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Level 15

"I HAVE HAD previous discussion on this issue."

But you started this as a new topic, so now it is out of context. Worse, those that have been helping you on the original topic, here:


Might not even know you started this here. And those here, won't see what you have already asked, answered, tried, and what still isn't working for you.

So now the same set of people, your peers on the filing due date, are not likely to see that the same one person has the same one issue but in two different places.

It helps to update your existing topic when you still need more info on that topic. And being that the original is in Tax talk, and you haven't asked a Pro Series question, it helps everyone, because your participation in the community on this type of issue is helpful to everyone. But not when it gets more confusing, split into different places, etc.


And please consider removing your real email address from this public internet forum, to avoid being spammed and attempts from scammers to reach you directly.


"Level Up" is a gaming function, not a real life function.