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

[DDollar]

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)