If you are an active participant in a real estate rental property, you can fully deduct real estate losses up to $25,000 against active income ($12,500 if married filing separately), as long as your modified adjust gross income (similar to AGI but with some addbacks) is less than $100,000. Between $100,000 and $150,000 of MAGI, the losses are phased out, so that once MAGI goes above $150,000 you can't take the loss in the current tax year. Losses that are not fully deductible in the current tax year are carried over to future tax years and can be used to offset other passive income, or can be realized when the property is sold.
