Rental property losses

[user17744465357]

Will claiming losses  on Schedule E line 16 reduce my federal taxes for the year?

if not how can I use losses to reduce federal income tax?

[DawnC]

It depends.  Most rental activities are considered passive.  Passive losses can generally only offset passive income (like profits from other rentals).  They cannot usually be used to lower the taxes you owe on ordinary income.   

The IRS allows you to deduct up to $25,000 of rental losses against your ordinary income if your AGI is within limits.   Passive activities are typically rentals or businesses in which the taxpayer does not actively participate.

• Losses not allowed in the current year may be carried forward to future years.
• Modified adjusted gross income (MAGI) limits apply, capping the special allowance at $100,000 or $50,000 for those filing as Married Filing Separately.

See More info on Passive Activities