[Oimie]

I just learned that rental losses are deductible but I am not sure exactly how is it applied. So assume the following:

I bought a house and I am paying mortgage of $2000 every month. I am renting it out for $1500/month. Is this considered a $500 rental loss?

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[Anonymous]

No, not just based on those facts. Mortgage payments aren't deductible, but the interest portion is. So, if you are paying $2000 a month in rent and it's $1900 interest, $100 principal, then with $1500 rental income, it's a $400 loss. However, if your interest payment is $1400/mo interest and $600/mo principal, then it's a $100/mo profit. I want to say the losses you can claim from rental property are capped at $3000 per year with a carry-forward period, but I may be getting that confused with something else (like long-term capital losses) – the caps and carry-forwards were never my strong suit.

[stoleway]

You can only deduct interest expenses, not the mortgage amount or principal.

However, you can deduct expenses like utilities, property taxes, supplies, depreciation, improvements… etc

Regarding losses, property owners with modified adjusted gross incomes of $100,000 or less may deduct up to $25,000 in rental real estate losses per year if they “actively participate” in the rental activity. You actively participate if you are involved in meaningful management decisions regarding the rental property and have more than a 10% ownership interest in the property. This allowance is phased out for taxpayers whose MAGI exceeds $100,000 and eliminated entirely when it exceeds $150,000. Thus, it is useless for high-income landlords.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[Ninja20]

Lilla.. Is there some cap ? Don't think so.. its carried forward indefiniely

[Oimie]

@Lilla @stoleway Thank you guys!

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[Author]

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