W2 Income and Rental Depreciation

[Edmund Fontana]

My wife and I make over $150,000 with our W2 jobs. Tax accountant basically said we make to much to write off the depreciation of our rentals. Can someone help me understand this and is continuing to buy rentals even worth it at this point? Does seem to be any tax advantage for us.

[Ashish Acharya]

Originally posted by @Edmund Fontana:

My wife and I make over $150,000 with our W2 jobs. Tax accountant basically said we make to much to write off the depreciation of our rentals. Can someone help me understand this and is continuing to buy rentals even worth it at this point? Does seem to be any tax advantage for us.

He is correct, but that statement is not technically correct. 

It’s not just depreciation. It’s can be any expenses that creates a net loss for you. The loss is limited no matter what drives it. 

You don’t lose these suspended losses.  They can offset other passive income. So if your other rentals generate net income, it can offset the net income. 

When you finally sale, you can use these suspended loss to offset your gain on sale as well. 

Also, if you were just investing in RE for tax shelters, your strategy needs to change. RE is more of wealth acclimation strategy, especially for someone like you because you are not depending on the cash flow form rentals to survive.