Form 8582 - Passive Activity Losses

[Winston A.]

Do I have to fill out Part II “Special Allowance for Rental Real Estate Activities with Active Participation” of form 8582 “Passive Activity Loss Limitations”?

I am married, and our combined AGI is $125,000.

We make all the decisions regarding our rental property. Our total loss this year was about $20,000. Can I deduct this total amount?
Or is my loss limited based on our AGI, and we can only deduct $12,500?

Line 5: 20,000

Line 6: 150,000
Line 7: AGI 125,000
Line 8:(Subtact line 7 from line 6) 25,000
Line 9:(Multiply line 8 by 50%) 12,500

Line 10:(Enter smaller of line 5 or 9) 12,500

Thanks in advance,

Winston