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mariposa2855
New Member

Is the threshold for rental property losses based on gross or adjusted income?

 
1 Reply
DDollar
Level 4

Is the threshold for rental property losses based on gross or adjusted income?

Actually it is Modified Adjusted Gross Income (MAGI).

A taxpayer may deduct up to $25,000 in rental real estate losses as long as the taxpayer actively participates and MAGI is less than $100,000. For every $2 a taxpayer’s MAGI exceeds $100,000, the allowance is reduced by $1.

Modified adjusted gross income (MAGI) for FORM 8582 line 7 is determined by computing:

AGI without:

  • Any passive loss or passive income, or                            
  • Any rental losses (whether or not allowed by IRC § 469(c)(7)),  or
  • IRA, taxable social security or
  • One-half of self-employment tax (IRC § 469(i)(3)(E)) or      
  • Exclusion under 137 for adoption expenses or
  • Student loan interest.
  • Exclusion for income from US savings bonds (to pay higher education tuition and fees)
  • Qualified tuition expenses (tax years 2002 and later)
  • Tuition and fees deduction
  • Any overall loss from a PTP (publicly traded partnership)

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