Reply to Loss Deduction and over 150,000 AGI

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[quote=Anonymous][quote=Anonymous]You don't lose the passive losses for this year, you just carry them forward for future years.  You can use this to offset passive gains for future years or when you sell the rental property many years from now.

For example, say you have a $10,000 loss this year on the rental property from depreciation and such.  For the next 2 years, you have a $5,000 profit each year.  You won't pay taxes on that income because you can use the loss from the previous year to offset it.

What is most likely, however, is that with depreciation you will show a paper loss almost every single year on your rental property and won't ever pay taxes on rental income.  20 years from now when you sell the house you will have a ton of carried forward loss, maybe $100,000 or more.  When you sell the house, you have to recapture the depreciation (meaning it reduces the cost basis for your house) and you will show a profit from the sale of the house.  You will use the $100,000+ carried forward loss to reduce the capital gains on the sale of the property.[/quote]

Thank you so much! I am so grateful that many who is on this forum are happy to help others![/quote]

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