Should the program allow rental property losses this year when it hasn’t in the past and the income level hasn’t changed?

[IreneS · Accepted solution]

Maybe.  Listed below are some things to check that may allow your passive losses to be included in the return.


Do you have other passive income in your return?
Generally, rental real estate activities are considered passive activities and losses aren't deductible unless you have income from other passive activities to offset them.

Is your Modified Adjusted Gross Income less than $100,000?
Taxpayers whose modified adjusted gross income, or MAGI, is less than $100,000 can claim up to $25,000 in rental losses. The $25,000 cap is reduced $1 for every $2 a taxpayer's MAGI exceeds $100,000. For example, a MAGI of $110,000 exceeds$100,000 by $10,000 so the $25,000 limit is reduced to $20,000.

Did you indicate that you "actively participate" in the property?
Property owners with modified adjusted gross incomes of $100,000 or less may deduct up to $25,000 in rental real estate losses per year if they "actively participate" in the rental activity.

Did you indicate that you are a real estate professional?
If you qualify as a real estate professional, rental real estate activities in which you materially participated aren’t passive activities, so you would be able to take the losses.

Was the rental property disposed of in a complete taxable disposition?
If so, your losses are not limited by the passive activity rules.