I make too much money...

[Ralphie Hernandez]

So today I called my CPA to let him know that I’m going to be buying rental properties in the near future. I Wanted to get some insight on some of the tax breaks I would be getting for having rental properties, he informs me that because I make too much money in my regular job that I will not qualify for tax breaks on my rentals. So my question is how is this going to affect my bottom line? 

[Daniel Dietz]

You have been getting some great advice here. There is a difference between having some tax free income, and actually reducing your *other* taxes due from W2s, K1s etc....

Meaning this..... say you buy a few rentals and your income is 100K. Deduct interest of 60K, PM of 10K, repairs of 10K, and you are left with 20K of "current cash flow". Now come in the depreciation (a non cash 'cost').... lets call that 40K, so you are sitting at -20K from a tax perspective. *This* is where "not being able to use real estate 'loses' " comes in.

You get to keep that 20K of current cash flow, and use *half* of the depreciation to bring your taxable income down to 0K, but you *dont* get to take the *other* 20K and count a 'lose' against your *other* income. My understanding is that this "suspended lose" *can* be 'carried forward' and used against future passive income or else when you sell to help offset capital gains. So not a total lose at all, just a postponing.

This is just my understanding of how my tax guy explains it to me, I am *not* a tax pro, at ALL ;-)