Does rental deduction deducted from only rental income or the entier income including W2 income for example

[Anonymous_]

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@Carl wrote:

@tarif-mohaisen 

so if income > $150,000 can't claim any of the rental deductions ?

You understanding doesn't appear to be clear.

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This was explained in a previous post (years ago). 

The reference is to the special allowance for active participation.

See https://www.irs.gov/publications/p527#en_US_2020_publink1000219124

[judgedeluca]

Is "Pension Income" considered "other income items" as it relates to the following statement?

A Rental Loss can only be used to offset other income reported on your tax return if you are an Active Participant in that rental property.  In this case, you would be allowed to deduct up to $25,000 worth of rental losses to be offset against other income items on your tax return (such as your W-2 wages).

[Anonymous_]

@judgedeluca 

Yes, the income would qualify to be offset but note that the offset is only your actual rental losses (not the entire $25,000) and the MAGI limitation applies.

[judgedeluca]

Yes.  Understood!  Thank you very much for your expertise! 

[RGBRE-64]

This thread is old but, to clarify; if someone doesn’t have any W2 income, they do have income from rentals but there were major deductions due to repairs, maintenance and other costs, they won’t receive any monetary *return* correct? Those losses only offset income from the rentals and would have also helped offset income from a W2, but without a W2, once the rental amounts have zero’d out, that’s it and there’s no actual money return because there wasn’t a taxable amount of income which experienced withholding throughout the year? Just wanting to verify. 

[PatriciaV]

You are correct. With no other income to offset the loss from the rental activity, no tax benefit would be realized in that tax year. 

However, passive losses are carried forward on Form 8582 to future years until 1) there is other non-passive income to trigger the exception, 2) the carryover losses offset Passive Income or 2) you dispose of the rental property.

TurboTax will automatically calculate your passive losses, apply them when possible, and carryover any excess. See Form 8582 Part II to review how the allowance is calculated. 

@RGBRE-64 

[RGBRE-64]

Thank you for the prompt reply! 
That is great to know regarding them being “carryover” and that TT will do it automatically! 

I will enter all losses/deductions as normal then. Almost didn’t seem worth it, as it’s tedious and there was no benefit in this years return but absolutely worth it if the realized losses will offset income on the next years filing! And without having to manually do 179 etc.

Thanks again! 

[PatriciaV]

You're welcome. We recommend entering all possible tax deductions, no matter how small. This allows TurboTax to use your entries to create the best outcome for your situation.