Reply to crude tax question - if you are renting out your home for less than your mortgage...

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[quote=Anonymous]This is a passive activity, but under the "active participation" exception you can deduct:
[quote]You actively participated in a rental real estate activity if you (and your spouse) [u]owned at least 10% of the rental property [/u]and you [u]made management decisions [/u]that may count as active participation or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and similar decisions. 
Maximum special allowance.   The maximum special allowance is: 
•$25,000 for single individuals and married individuals filing a joint return for the tax year,
•$12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and 
•$25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified.
  If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI.

Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance[/quote]
[url]http://www.irs.gov/publications/p17/ch09.html#en_US_2011_publink1000171747[/url][/quote]

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