I have a client that manages his own rental property (active and material participation). First year renting. The rental has a $10K loss but it is not transferring to form 1040. Deductible real estate loss shows "0' in Sch E. Is there an income limit? MFJ ADJ Gross is $392K. I'm not understanding why my client cannot report this loss. Your feedback is appreciated.
Rental real-estate is passive income. If your client is active there is an exception that allows him to deduct from other income up to $25000, but that phases out when AGI is $100,000 - 125,000. above $125,000 only deduct loss from other passive income.
"MFJ ADJ Gross is $392K."
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