We recently purchased a condo as rental property. We spent 50k on repair and improvements on it. Our gross income is around 60k this year, when we file our tax, we were told by the accountant that we cannot deduct more than 10% of our income. Is that True?
I am not familiar with any type of 10% limit. Perhaps, he was speaking of a concern over audit risk.
More importantly, you need to be careful of what you are expensing. Improvements need to be put on a depreciation schedule while repairs are an expense.
Your passive activity rental real estate loss will be capped at $25k regardless of what you write off. However, it can be carried over to future years.
I am not familiar with any type of 10% limit. Perhaps, he was speaking of a concern over audit risk.
More importantly, you need to be careful of what you are expensing. Improvements need to be put on a depreciation schedule while repairs are an expense.
Your passive activity rental real estate loss will be capped at $25k regardless of what you write off. However, it can be carried over to future years.