How much is the loss?

[Joans1738]

If you have have -$80,000 in losses from schedule E, how would that effect your overall taxes? How is it calculated? For example, if I owe $5,000 before doing schedule E, how much would the -$80,000 loss bring it down?

[DawnC]

The max Schedule E loss you can claim is $25K if your AGI is within certain limits.  If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can report on Schedule E.   You must consider these rules in the order shown below.  

1. At-risk rules. These rules are applied first if there is investment in your rental real estate activity for which you aren’t at risk.   This applies only if the real property was placed in service after 1986.   See Pub 527 link below.

2. Passive activity limits. 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.  However, there are exceptions.  

Pub 527, Exceptions - See this link for more information.