Author Topic: Ordinary vs Capital Losses  (Read 292 times)

Sand11

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Ordinary vs Capital Losses
« on: November 01, 2018, 09:35:08 AM »
I'm currently reading the Bigger Pockets book, "Tax Strategies for the Savvy Real Estate Investor" and was a bit confused on the section that discussed reporting losses. They claim that real estate losses are considered an "ordinary loss" instead of a "capital loss" which means you can offset your W-2 income with it. I was under the impression that real estate losses could never offset W-2 income. I would love to be wrong on this, but they say it is a common mistake. They mention people get confused because selling a rental property for a gain is considered a capital gain. They then go on to incorrectly treat a loss as a capital loss. Anyone have any input on this?

tralfamadorian

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Re: Ordinary vs Capital Losses
« Reply #1 on: November 01, 2018, 12:16:20 PM »
I was under the impression that real estate losses could never offset W-2 income.

You're mistaken on this one. One of the greatest RE tax benefits is the ability to deduct up to $25k of RE losses against other income. There is an income phase out.