HCE Wage Earner with Rental Properties - Tax deduction & Pass-thr

3 Replies

Hello Forum members, I need your help. I am a W-2 Wage earner with adjusted income above $150K and unable to deduct the rental losses on my 2 properties. I have a registered LLC, but the properties are not titled in the LLC name (also mortgage on the properties). Is there a way to get the losses deducted through the LLC? Also, the new GOP tax plan is very generous for pass-through entities. I was wondering if there is a way to claim the loss through the LLC to allow for tax deduction without transfer of the title to the LLC. Thank you.

The pass through deduction is still allowed even if you own properties in your name.

You will need to continue to report the income on your individual income tax return if the property is still in your name. You can’t just report everything on a Partnership tax return unless title is changed to the LLC.

Thank you, I appreciate the feedback. Potential sale of one of the rentals in 2018. Taxable income exceeds $157,200 on W2. What is the possible impact of the new law on the capital gains from the sale of the rental? 

@Missy Price just a minor point of clarification: You CAN deduct the losses on your rental properties. However, those losses are SUSPENDED until you have additional passive income OR you sell the property. The passive losses you generate are not worthless, but the gratification of taking them will be delayed. You may not be able to take them in the year they were generated, but you will be able to take them eventually. 

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