offset rental income with rental loss ?

[George P.]

trying to find the answer but cannot find anything useful.... 

* I have a rental property that produces 7k rental income/yr.

* I want buy a (vacation) rental property that will produce 9k of rental loss/yr.

* our MAGI exceeds 150k.

* We are materially / actively participating in both properties, but we are not RE professionals.

The question is - can we offset the 7k of rental income that we currently pay taxes on with the 9k rental loss so that we pay $0income tax between the two properties, and carry forward the 2k (a year) loss until the day we sell vacation rental property?

Or - do we have to pay the income tax on 7k rental income without ability to deduct a penny from the 9k rental loss (due to MAGI>150k) ?

Thank you in advance!