rental property tax related

[Aariff Kadar]

I have a day job and i am planning to buy a new primary residence by renting out my current residence.

Questions:

 I will get rental income of $36,000 and expenses of $44,000 (Includes mortgage insurance, property tax and depreciation), will this offset help saving taxes from my day job? Is here any restrictions, i need to consider?

I am also planning to use the mortage insurance and prperty tax from the new property which i am planning to buy?

Am i missing anything? Do i have to know anything before i take any major steps?

Aariff

[Natalie Kolodij]

If your Modified Adjusted Gross Income (Income from your job, interest, dividends, ect) is under $100k then you will be able to use the loss generated by your rental to reduce your w2 income. This is a small taxpayer exclusion and allows up to a $25k loss annually. 

If your income is above $100k the allowable loss begins to phase out- and if your income is over $150k you can not utilize the loss against your income. It will carry forward to the next year when you have passive income to utilize the passive loss against.