What is the maximum deduction allowance for rental expenses? Last year we were only allowed $25000. Can we deduct the rest of expenses this year?

[Miguomao]

Last year we had bad tenants who badly ruined the house before sneaked out.  Also had to replace the AC.  This year had to replace the roof.  So need to know if $25K is the cap for deduction.

[Critter-3]

The cap you hit was due to your total  income being more than $150K  so the loss was limited but not lost ... the unallowed loss is simply carried forward until you can either use it  or  you sell the property.  The program will complete the form 8582 automatically ... review that form. 

[Miguomao]

Thanks so much for the information!  What I do not understand is, my income is not over $150K, not even a half of it.  But I was not allowed to report more losses.... ( From Turbo).  I will study the information you provided more closely,try to find out what was wrong....

Thanks again for your kind help!  Wish you a Happy New Year!

Ying

[DaveF1006 · Accepted solution]

@Miguomao. It depends what your income is for the year. If your Adjusted Gross Income(AGI) was less than $100,000, you may deduct up to $25,000 in passive losses for the year if you actively participated in the management of your rental. It sounds like you were able to deduct the full $25,000 based on your income.  As Critter 3 stated above, any losses in excess of $25,000 can be carried forwarded until it is used or your property is sold. $25,000 is the maximum amount of passive losses claimed in a tax year.

Please review the following IRS publication especially on page 2-1 entitled "The $25,000 Allowance In a Nutshell".