Income Limits to Mortgage Interest Deduction?

Question

Hello,

I have a fairly high AGI and am wondering if there is an income cap for taking the mortgage interest deduction and depreciation on any rental properties I may buy in the future.  I hunted around, and I don't believe there is (I believe this is separate from the 150K AGI limitation on taking passive losses against wage earning income).  We just refinanced our townhome and are looking to keep it as a rental and buy a new primary and I want to make sure we can take maximum deductions and expenses running our new rental as a business.

Thank you,

Jeff

Steven Hamilton II · Answer

There isn't for your rentals; however, the itemized deduction limitation is for your Schedule A. It does not apply to Schedule E.  The schedule E items are restricted to income and the remaining expenses carryover as a passive activity loss to be use when you sell or when your income is low enough to deduct losses against your income.  I have written extensive posts on this topic. Feel free to take a look at some of my post history.

Robert Feldman · Answer

You can take the full mortgage interest and depreciation deductions on rental properties as long as you have positive net income on the rentals. Your AGI will not come into play. However, if there is a loss there could be a restriction on the amount of loss you get to take. If you cannot take the loss in the current year, then you can take it against a gain in a future year.

Russell Brazil · Answer

You are limited on your passive losses unless you or your spouse qualify as a real estate professional. While you do not lose the losses if you exceed the income limits, which is fairly easy to do since the limit really isnt that high, they just continue to carry forward till when you can use them, or when you sell to offset your gains.

Income Limits to Mortgage Interest Deduction?

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