High earner looking to off set tax bill with real estate

[Erica C.]

Hi! My husband and I are high earners from our day jobs this year and will have a very high tax bill.  I am wondering if buying a property and renting it will help to offset or federal income tax that we will owe at the end of the year ($50,000 or 33 % according to the 2016 brackets).  I am not looking to have positive cash flow (as to add to my tax burden), but just an investment and something where I could write off expenses.  Is anyone here in this type off situation?  Not looking to make $ but just have an investment tax shelter?

Can you deduct your mortgage interest even if it's not your primary residence?

Can you deduct insurance as a business expense?

Has anyone been successful deducting maintenance costs?

Can I deduct a property managers fee if I choose to use one?

Thank you in advance for your help!!

Erica

[Jason Bott]

@Erica C.  @Brandon Hall is an accountant & can answer this question if he isn't already too busy with tax season.

I am in the same boat as you, and asked my accountant about it.  He stated your working wages are "Active Income" and your rental income is "Passive Income".  You can not use Passive Income losses to offset Active Income tax.

The goal is to get your rental business to the point where it can be considered Active Income in the eyes of the IRS.  He stated working in the biz 1,000 per year would constitute Full time, making the deductions eligible to offset regular income tax.

BUT, I'm the insurance guy, not the accountant:)  So don't take my word for it.

Good Luck