Reply to Loss Deduction and over 150,000 AGI

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[quote=Anonymous][quote=Anonymous][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]

OP here, Yes we read the same thing and I am reading that if we have passive income, we can deduct passive losses even with AGI of 150K but my husband is reading in no circumstance will you be able to deduct any passive income with an AGI of 150K. Please clarify who is right. Some here are saying my husband is correct. I don't think he is correct.[/quote]

if your AGI is more than 150K, you can deduct passive losses only to the extent you have passive income i.e. until you get to zero. The excess passive losses are carried forward to future years. In your case, in 2013 you only have passive losses and no passive income. None of the losses are deductible in 2013 but you can cary forward to 2014. Keep in mind, that with depreaciation expense for the rental property, it is likely that your losses will always exceed your renatl income. So you will not be taxable on the rental income since you will reduce it down to zero, but you will not be able to reduce your taxable income for any of the passive losses.  [/quote]

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