That depends on your participation in the rental activity and your modified adjusted gross income (MAGI). If you actively participate in the rental activity—for example, if you set the rental terms, approve the tenants, determine and approve major property improvements, etc.—you can deduct up to $25,000 of your rental losses. However, this deduction decreases when your MAGI exceeds $100,000 and disappears completely when your MAGI reaches $150,000. For more information about deducting rental expenses, please see Real Estate Tax and Rental Property.
Note: You'll report the income and expenses from the rental property on Schedule E: Supplemental Income and Loss.
