Over $150K Income, One Rental, Joint Filing Headaches. What Would You Do

[Katie Southard]

Hey BP community, I could really use some perspective from folks who’ve been here.

Here’s our situation:

• We have one rental property (premarital, in my name) and a small attached unit in our primary home (joint title and mortgage) that we also rent out. Together, they bring in about $25–30K/year before expenses.
• My husband and I both work W-2 jobs, and are blessed to make about $200K combined income, and we file jointly (our tax guy says it’s almost always better. I’ve questioned it and continually insists this is the way to go).
• Here’s the catch: my husband has to furnish taxes every year to his ex for a custody case, and she combs through them. They make identical income but she’s relatively vindictive and super bored. Even though the main rental is mine legally, she calls it “his income” and makes it a big deal. Filing jointly just makes this messy. We already deal with 50 emails or more per month from the ex about any topic imaginable and try hard to limit our interactions and exposure with her. It’s a story for another type of forum…lol.

This year, our tax pro mentioned the $150K limit on the $25K rental loss deduction. I researched it and understand it- because we’re over $150K, losses just get deferred and carried forward until a sale or until we have passive income to offset. But it got me thinking:

• Is it worth pushing for filing separately so the rental income/loss stays with me, at least for the property in my name only? Or is that always a bad move financially?
• For those making over $150K, do you just accept that losses carry forward and not stress it?

Future thoughts:

• I may sell this rental in 2026 and buy 1-2 more properties. We would keep that activity in my name if possible. We need to decide this year because of the cap gains rule (we lived there before).
• Long-term dream is to scale enough that one of us can quit W-2 work and eventually hit real estate professional status (750 hrs) for tax benefits. Probably me if it happens, though logistically with my job benefits it’s more prudent to probably be my husband.

So I’m trying to figure out several things- both short-term (tax strategy) and long-term (career path). Has anyone navigated something similar—especially the filing status issue and the income threshold problem?

Would love to hear:

• How you handled taxes once your income went over $150K
• If you’ve filed separately because of personal/legal reasons—did it help or hurt financially?
• In what other ways could jumping from W-2 to real estate benefit us? We have several acquaintances who do this and they seem to write off plenty of losses- things we cannot write off now. One of those examples would include traveling to go look at homes in another state which we do at least once a year, but we cannot write off any of this activity because we don’t actually own a home in those states yet. A CPA once told me once I have more rentals including one in the state that I’m traveling to this could potentially qualify as a write off, but not yet.

Appreciate any advice—thanks for reading this wall of text. I know I’m asking several things so if you can only opine on part of it that’s perfectly fine.