Rental tax deduction

[Stanley Hendratna]

I started STR last year (my first investment property) while working W-2 job. Is it true that I cannot claim loss from the rental property if my income is above 150k (married filing jointly)?

[Bruce D. Kowal]

There is a Special Allowance of $25,000 for losses from a rental activity for someone in your situation.  That means that losses up to $25,000 are allowed to offset your W2 income - - but you can't make too much money!  The loss is completely phased out when your Modified Adjusted Gross Income is > $150,000.  All is not lost, however.  Whatever your losses may be, they are "suspended" [A Magic Trick]. They are called "disallowed losses" and are carried forward to future years.  When you finally sell the property, you can then, at that time, deduct those losses.

These are the Passive Loss rules, which Congress set up to curb some pretty wild "abuses".  You need professional help with this.  Don't try it yourself using T*rb* T*x unless you have an idea what the outcome should look like.