Reply to Loss Deduction and over 150,000 AGI

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[quote=Anonymous]You can certainly net passive losses against passive income.  If you had no passive income, you can still deduct $25,000 generally for rental real estate unless you made over $150K AGI.

From IRS Publication 925:

"Special $25,000 allowance.   If you or your spouse actively participated in a passive rental real estate activity, the amount of the passive activity loss that is disallowed is decreased and you therefore can deduct up to $25,000 of loss from the activity from your nonpassive income. This special allowance is an exception to the general rule disallowing the passive activity loss. . .

The maximum special allowance is reduced if your modified adjusted gross income exceeds certain amounts. See Phaseout rule, later. . .

Phaseout rule.   The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income that is more than $100,000 ($50,000 if you are married filing separately). If your modified adjusted gross income is $150,000 or more ($75,000 or more if you are married filing separately), you generally cannot use the special allowance.[/quote]

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