Profile picture for ChrisMeunier

How are others able to deduct rental losses with income over 100k?

I'm looking into renting out my home but was told by a CPA that I cannot claim any losses once my AGI goes above 100k. Yet I know several people in my family, who make over 100k, and have been taking a rental loss deduction for several years now. I imagine MOST renters do make over 100k (especially if they are married). So, how do people get around this? Is there something I am missing? 

Thanks,
Chris
  • January 15 2012 - Campbell
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Answers (3)

Profile picture for Caveat Emptor
first, you have a CPA and you are asking us?

second, ask a cpa.

third, if you want to take a deduction that a cpa tells you is illegal, fill out your own tax forms and take your deductions. if you get audited, then you'll have to pay back taxes, plus fees and interest, but you can game the system like your buddies.

my guess is that, like most landlords, your friends are misreporting their AGI in order to take a deduction that they feel they deserve. okay, not mis-reporting, creatively reporting. for instance, perhaps their primary residence is also coincidentally a rental unit that they forgot to mention to uncle sam, or maybe they realized that they can get away with more by funneling the money through a llc or an S corp. you should talk to a CPA about tax planning (future tense) so that you can take the deductions you desire next year.
  • January 16 2012
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This is how I get around it,I have a different theory: I like to MAKE money on my investments, not lose money... thus how to deduct losses isn't really an issue. 

But, I believe you can deduct passive losses against passive gains in the same year, or you can carry them forward for passive gains in the future. 
  • January 16 2012
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Seems like a tax question, not a real estate one.....
  • January 16 2012
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