Posted by Dave T on December 18, 2004 at 10:05:56:
You’ve got it basically right.
Passive Losses from your rental activity are used in the following order:
To offset rental income
To offset passive income from other passive income activities (e.g., a limited partnership in which you are a limited partner)
To offset capital gains from the sale of your rental property
To offset ordinary income to the extent permitted by the $25K passive loss allowance
Finally, if you get past number four and still have unused passive losses, they are suspended and carried forward to the next year when the sequence is repeated from step one.
My AGI is above $150K. Does that exclude me from taking mortgage interest, HOA, Prop Management, Prop Taxes, DEPRECIATION, and other rental expenses as deductions against the rental income?
Thanks, Will
Posted by David Krulac on December 17, 2004 at 22:16:31:
unless you’re a re pro of 750 hours per year. But all is not lost. You can still offset any passive income against those expenses. And if your expenses including depreciation exceed your passive income the loss is carried forward indefinately or until you sell the property, at which time the unused losses can reduce your capital gains.
Hi David,
First, thanks for your insight.
So let me rephrase what you said in my own words to make sure that I understand. If I am NOT a re pro, and my AGI is in excess of $150K, I can take the expenses (including depreciation) against the passive income (rental income) up to the amount of the passive income. If the expenses exceed the passive income, the portion that is in excess can be carried forward till the sale of the property and used to offset the capital gains of the sale.
That the same as what you said?
Thanks.