topic Passive Losses offsetting W2 Income in Investors & landlords

Passive Losses offsetting W2 Income

samuelayers — Wed, 11 Feb 2026 03:44:21 GMT

I am married filing jointly. My wife and I both have AGI under $150,000 each (we are not real estate professionals). We have passive rental property losses from CY23. Shouldn't we be able to offset our W2 income with these passive losses? I don't see any indication that our taxable income is being reduced by these losses.

Re: Passive Losses offsetting W2 Income

Mike9241 — Mon, 12 Feb 2024 16:45:37 GMT

do you mark you actively participate? if not, the special allowance is not available. look at form 8582.

Active participation depends on all the facts and circumstances. Factors that indicate active participation include making decisions involving the operation or management of the activity, performing services for the activity, and hiring and discharging employees. Factors that indicate a lack of active participation include lack of control in managing and operating the activity, having authority only to discharge the manager of the activity,
and having a manager of the activity who is an independent contractor rather than an employe

Re: Passive Losses offsetting W2 Income

samuelayers — Mon, 12 Feb 2024 16:53:31 GMT

Thanks for your response. I am an active participant and do have "Active Participant-yes" selected. Toggling between yes/no had no impact on the refund total.

Re: Passive Losses offsetting W2 Income

samuelayers — Tue, 13 Feb 2024 15:44:42 GMT

I figured it out. Form 8582 limits this special allowance to modified AGIs less than $150,000 (total) for married-filing jointly.