If your net profit or loss is zero, either your rental income and deductions were equal and this netted to zero, or your loss is considered to be a passive loss and therefore, not deductible.
Rental activity is considered passive income, but there is an exception to that rule that allows some taxpayers to deduct their losses.
If you actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your non-passive income.
If your Modified Adjusted Gross Income (MAGI) is
- $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to $25,000.
- If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI.
- Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance.
There is also an exception for real estate professionals.
If you have a loss you can't deduct because it is passive, the loss carries forward until you have enough passive income to use it, or you sell the property.
This is helpful when you sell your rental, all those un-allowed losses can offset your gains from selling.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
