Why in years past did my rental property loss affect my taxable income but not this year?

[NathanSimms]

Information:

- Standard Deduction Taken historically

- Multiple rental properties

- Historical income north of $100k less than $150k (able to claim rental property loss)

In years past, looking through 1040s and Schedule Es I have noticed that TurboTax has been able to take my wages -- to use round numbers -- of $100k and subtract the standard decuction of $24k as well as subtract the max loss for rental properties allowed of $25k taking my taxable income down to about $51k.  This year however it seems that they aren't able to take into account hardly any of the $25k rental property loss... to be specific they only took into account about $2k.  I am seeing something labeled as 'special allowance' on form 8582 Passive Activity Loss Limitations from years past with dollars in there getting me to the cap of $25k, but nothing in this years form.  Has anything changed this year that I'm not grasping?  Or am I looking at this all wrong to begin with potentially?

Any help or insight would be greatly appreciated.

[DavidS127]

Check to make sure you indicated Active Participation on the Schedule E on all the rental properties.

[AmeliesUncle · Accepted solution]

Is this year's income higher, such as $140,000-$150,000?  If so, that is why.  The $25,000 maximum starts to be phased out" at $100,000, and is eliminated by $150,000.  So the higher your income, the $25,000 get lower and lower.

[ColeenD3]

Is it possible you made an entry error and indicated that you had a higher income than you actually had? 

[NathanSimms]

Great call-out!!!  Thank you for the direction.

I did just double check to make sure I had already done so and I have confirmed that I did in fact indicate I was an Active Participant on each property.

Thank you though for guiding me to double check that.  Much appreciated.

[NathanSimms]

You seem to have hit the nail on the head with this one.  You are correct in that we are close to that cap of $150k whereby the passive loss would be minimal to the point of being just a few thousand dollars.  I didn't think of it as being 'phased out' as such but would completely explain what I am experiencing -- some not all of the loss credit.

I'm guessing at this stage that I will simply need to carryover any future losses on top of this years remainder having everything add up until we sell the place and take the credit then.

Thank you for this insight.  This was fantastic!

[NathanSimms]

Great call-out here.  After reading your comments about mis-typing the income stated I did double check everything -- both W2 entries and Rental Income entries -- and they all seem to be in order.

Thank you for the double check angle though.  Much appreciated.