Rental Real Estate Loss Allowance?

Question

Our AGI is over 150K.  I realize there are incentives to owing investment property but is there any tax incentive when you make over 150K? I can no longer claim my loss from rental properties.  So is there a tax advantage to buying more property?

Michael Plaks · Answer

@Jimbo Rocks

Your biggest tax advantage is that your properties can generate positive cash flow without increasing your tax burden.

Losses would be nicer but you can't use them above $150k unless one of you becomes a full-time investor without W2 job.

Henry Clark · Answer

1031 exchange, expense writeoffs, if you have kids advertising income for them, leveraging equity versus selling, cost segregation deferred losses versus possibly your future retirement and personal income reduction, 2 out of 5 year primary with 250k per each husband wife.

Don’t make decisions based on taxes. They should be secondary.
Don't really want to have a conversation on REI versus other investments. 100s of posts already out there. There are many REI strategies. Just look for ones that meet your goals.
It is okay to pay taxes as a strategy.

Julio Gonzalez · Answer

As @Joseph Palmiero mentioned, the STR strategy could work for you at that income level as long as you materially participate in it.

Joseph Palmiero · Answer

There is a tax strategy often referred to as the "Short-Term Rental Loophole".  This strategy can be used to offset W-2 income.  I would not do it just for the tax benefits because it can be a lot of work.  It might be something to pursue if you are already interested in the Airbnb (STR) idea.

Jimbo Rocks · Answer

Thanks Michael

Not clear on how my investment income decreases my taxes if I cannot claim the expenses from the property.

I will be retiring soon without a W2 and will need to see what I need to do establish myself as a real estate professional.

Jimbo Rocks · Answer

Right, I will not base my decision on taxes.  I was asking because I thought this income threshold might have been with the update IRS pub 527. I still need to read.  Still learning

Appreciate your time

Thank you

Rental Real Estate Loss Allowance?

Most Popular Reply