If our total gross income is over $150K I am not allowed to take any loss towards my income correct?
If you're married filing joint, that's correct if you add the word "other" in your comment above between the words "my" and "income". So correctly stated your question above would be "I am not allowed to take any loss from my other income. " But all is not lost! Those losses you can't take get carried forward to the next year.
Understand that it is not common for residential rental property to actually show a profit on paper at tax filing time. It's just the opposite.
Typically, when you add up the allowed deductions of Mortgage Interest, property taxes, property insurance and add that to the depreciation you're required to take each year, those four items alone almost always exceed the total rental income received for the tax year. Add to that your other allowed expenses (maintenance, repairs, etc) and you're practically guaranteed to show a loss on the rental property every single year.
Those losses just get "carried over" to the next year, and with each passing year those losses will just continue to accumulate and grow. You can't realize those losses until the tax year you sell the property. In that tax year, those accumulated losses can be used to reduce the taxable amount of the gain you realize on the sale, as well as reduce the taxable amount of "other" income once those losses get your taxable gain on the sale to zero.
Read my last sentence in my previous post, and let me know.
