Author Topic: How little do you have to make to deduct rental expenses?  (Read 2046 times)

badassprof

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How little do you have to make to deduct rental expenses?
« on: September 22, 2012, 05:03:59 PM »
Hi,
I asked Galaxie this question on her blog and then it occurred to me that maybe this is a question for a more general mustachian audience: what is the maximum amount you can make to deduct rental expenses?

Our taxable wage income is around 187,000 or so (varies depending on bonuses).  Gross it is probably over 250,000 as we max out our 401ks and our FSA and our rental unit (which is below our house) brings in around 24,000.  Our accountant has told us a number of times that we cannot deduct our rental expenses right now because our income is too high, but that when our income drops (probably when we retire, which is admittedly a while from now) we'll be able to take the deductions retroactively.  (She files the amount of rental expenses each year with the IRS).  I was discussing this with my  dad, who  said this sounds strange to him as does the income limit, but he also admits that our income is higher than what he made, so he is unsure.  Do any of you know for sure?  Also, if it makes a difference, we're in California.  Thank you in advance!

michelle

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Re: How little do you have to make to deduct rental expenses?
« Reply #1 on: September 22, 2012, 05:15:23 PM »
Read pages 3 and 4 of Form 8582 instructions. You can take passive losses against passive income or if your adjusted gross income is less than 100k you can take up to 25k rental losses against other sources of income. Anything that is limited should be carrying forward to use in the future or if you disposed of the rental.

badassprof

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Re: How little do you have to make to deduct rental expenses?
« Reply #2 on: September 22, 2012, 06:54:17 PM »
Thanks, that was my sense too, but my dad had me questioning... ;)

nbiller_cpa

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Re: How little do you have to make to deduct rental expenses?
« Reply #3 on: September 23, 2012, 11:53:02 AM »
FYI, the other way to release the suspended rental losses is to sell the property. That should be a factor in your decision of whether to sell the property or not.

badassprof

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Re: How little do you have to make to deduct rental expenses?
« Reply #4 on: September 23, 2012, 01:44:31 PM »
Thanks:  that is a good suggestion. Right now, the place is our primary residence so we don't plan to sell soon.

salmp01

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Re: How little do you have to make to deduct rental expenses?
« Reply #5 on: September 24, 2012, 07:17:58 AM »
You could also purchase another rental property, rent it out for a while and sell it.  Any gains you make on this would be taken from your carry-forward losses.