The $25K offset when making more than 150K/year.

[Matt T.]

I'm just starting out and am in the process of closing on a SFH in California's central valley.

I’m reading the NOLO “Every Landlord’s Tax Deduction Guide” and have a question about net operating losses and the $25K offset.

Importantly, we live in California and my wife and I make more than 150K/year.

As I understand it, because we make more than 150K/year, we won’t be able to take advantage of any net operating losses we have on paper. Is this correct?

I saw a reference on another forum (it was not credibly cited) that suggested that if you can’t take advantage of the 25K offset, then you can add any losses back into the building’s cost basis? Is there any truth to this?

So, to sum up, I’m wondering if there is any benefit for those of us living in high-income areas (I’m not rich—I’m a high school teacher) to show a net operating loss on paper?

Thanks.