HELP: Tax-Write-offs or limiting losses w/ high day job income?

[John Anderson]

Hi everyone, 

I need some tax and legal advice in my situation where I have been incurring a good amount of unexpected expenses, and after some research tax rules seem to allow up to $25K of write-offs a year, but is phased out all together when your AGI exceeds $150K if you are a passive investor.

Background:

I bought what I thought was a great cash flowing 4-unit multifamily property earlier in the year full occupied which was great for a few months.  Then I ran into a number of tenant issues, criminal activity in my units, vacancies, and maintenance expenses which leads me to a never ending nightmare of costs lately with very little rent.  I could sell the property and get out, but I see long term potential after I turn it around and want to keep it for now.

I foresee about $20K in net losses this year, and make over $150K annually in my day job. Although I know my salary is great and way above the national average, I am by no means rich, especially located in California's SF Bay Area where cost of living is probably #1 in the country and I've got 3 kids to support :-).  I have a property manager, and am considered a passive investor, so looks like I can't write-off anything which hurts pretty bad for my family this year.

The only thought that I have (and I am not sure how possible or legal this is) is that my spouse makes $70K/year, although we are NOT married and separate our finances in a way that we actually file single every year.  I bought this rental property solely in my name earlier this year, but I wonder if there is a mechanism or possibility that I can add her to title /owner or even fully transfer to her (which I do not mind) and leverage her lower income that qualifies for tax write-offs to help me with these expenses this year?  I'm sure there are tax and legal implications with ownership, her level of participation, etc. that need to be considered that I am not sure of based on the scenario/situation/result that I want.

Of course, I should consult a tax and legal professional for my specific situation, but I wonder if anyone here on this forum can directionally give me some guidance on any possibility in my situation here, so then I have a foundation and basic background to pursue.  Also, if there is a chance here, and I can add my spouse to title or fully transfer now before the end of 2015, can she take advantage retroactively of expenses incurred earlier in the year before she was officially part of the ownership for the tax year?

Thank you in advance for the help!

-John