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Updated about 7 years ago on . Most recent reply
Incorporating to deduct rental losses
Last year I filed my taxes as single, and owned a rental that returned a loss. I was able to deduct the losses on my taxes.
This year, I am married. The same property once again has a loss. If we file jointly, it seems we cannot deduct the property losses due to income limitations, as we make over $150k jointly. With married filing separately, the allowable losses to deduct is zero.
Is there a way around this, such as putting our property under an LLC?
Most Popular Reply
- Tax Strategist| National Tax Educator| Accepting New Clients
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@Rob Stinogle If you own it for 10 years and it has a $5k loss each year that you can't take you've now accrued $50k in losses that are just in limbo.
The year you sell it "frees up" those losses. So it will reduce your taxable income by $50k regardless of your income limit.
The other option that allows for taking these losses is qualifying as a RE professional per IRS standards. Talk to your CPA about this option as it can be tricky.
