I am using Turbotax Premier 2019 online. When I enter rental expenses the program arbitrarily changes all the amounts so that the equal the lesser rental income amount which results in a 0$ balance rather than the loss the property actually had.
I've never encountered this situation before!
I have gone back through and reentered information in that section four times now. It's become incredibly frustrating and I'm uncertain as to how to fix it.
There is a income limitation on rental losses taken on a return. Your combined income may be over the income limitation.
The losses that are not deducted are tracked on the return. If your income would drop in a future year and/or you sell the property these losses would be applied to the sale.
Rental losses are always classified as "passive losses" for tax purposes. This greatly limits your ability to deduct them because passive losses can only be used to offset passive income. They can't be deducted from income you earn from a job or investments such as stock or savings accounts.
Exception to Passive Loss Rules
- your income is small enough that you can use the $25,000 annual rental loss allowance.
Property owners with modified adjusted gross incomes of $100,000 or less may deduct up to $25,000 in rental real estate losses per year if they "actively participate" in the rental activity. This allowance is phased out for taxpayers whose MAGI exceeds $100,000 and eliminated entirely when it exceeds $150,000.
TurboTax has an article on this subject that goes into more detail: Real Estate Tax and Rental Property
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With Covid, sick tenants unable to work/sent home and shorting rents, is there any sign that IRS/Turbo Tax will increase the $25,000 maximum loss on rental property this year that youve heard about? $35,000 would help a lot, as an example. Thanks!
I cant think of an easier way to solve the Covid rent-shorting problem affecting tens of thousands of landlords and tenants than increasing the $25,000 passive rental loss limit. How else they gonna address it, IF they address it? Set up a whole NEW program to review documents and send out grants and loans to whacked landlords? Half of landlords are already losing money on rentals (which is often the goal). We're talking people like me who rent out 1-4 apartments.
I cant think of an easier way to solve the Covid rent-shorting problem affecting tens of thousands of landlords and tenants than increasing the $25,000 passive rental loss limit. How else they gonna address it, IF they address it?
How about getting rid of Section 469 of the Code entirely?
That would address a lot more issues than just those relating to landlords. Regardless, they will probably elect to not address it at all.