Reply to Is renting a place out worth it considering the Depreciation Recapture Tax?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Assuming you either have an AGI of over $150K OR you do not manage the rental property yourself, you cannot deduct rental losses from ordinary income, so what you need to do is 
- compare the income you bring every year after all the expenses and taxes from the rental with your capital gains rate *((price of your house + cost of improvements made)/27.5years)

If you both have AGI of under $150K and manage your rental yourself, you can deduct losses from the rental (including depreciation) from your ordinary income, so you don't stand to lose anything. 
[/quote]
Ok, I assume you do know what you're talking about

Those losses (including depreciation) from renting - "passive loss" cannot be used to offset ordinary income, but it should be accumulated, right?
Now, question is - can you offset income from sales of the rental property (capital gain?) by accumulated losses from rental activity?[/quote]
Wrong. Losses from renting can be used to offset ordinary income if you both manage your rental yourself and have AGI of less than $150K. 
[quote]Exception for Rental Real Estate With Active Participation

If you or your spouse actively participated in a passive rental real estate activity, you 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 losses in excess of income from passive activities. Similarly, you can offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception.[/quote]
[url]http://www.irs.gov/publications/p527/ch03.html#en_US_2012_publink1000219121[/url]
I am not aware of any kind of "accumulation" of such losses. [/quote]
Thanks for the link. I would like to hear your interpretation of  Pub 925 quote: [quote]Dispositions
Any passive activity losses (but not credits) that have not been allowed (including current year losses) generally are allowed in full in the tax year you dispose of your entire interest in the passive (or former passive) activity. However, for the losses to be allowed, you must dispose of your entire interest in the activity in a transaction
in which all realized gain or loss is recognized. Also, the person acquiring the interest from you must not be related to you [\quote] 
http://www.irs.gov/pub/irs-pdf/p925.pdf
[/quote]

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