With income in excess of $150,000 you can deduct expenses, but you cannot take a loss on the property, as this is classified as a passive loss. So your deductions are limited to your income from the rental. Tax law limits these losses.
However, unused losses do carry forward and can be applied to future years. If you sell the property, any unused losses can be used to increase the basis of the property at sale. So, you do get the losses, but they are deferred.
Please complete the rental section to file a Schedule E so that you will be able to claim all related expenses and depreciation , so if any passive loss , that can be carried forth even up to the time the property is sold.
"Active participation" .Renting out real estate property is generally considered a passive activity.The term "active participation" is a less stringent standard than "material participation."
You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions.
Try this path to review questions and answer questions as to active participation and the entering of allowed expenses at your rental summary screen.
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NOTE::: Vacation rental with personal use will have a different outcome than a regular residential rental without personal use.
