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I appreciate your thoughts and if I could find a place that costs $100,000 that someone would rent for $2,000 a month I would own 500 of them and retire on a gold yacht somewhere.

My question about whether or not you can get around passive loss deduction AGI limits by forming some kind of business structure still stands, though.

Also, I'm not sure it's a good generalization to say that "50% of your income will be eaten up by cost", since apparently what I could rent here in the Chicago area for $2000 would cost $300,000, whereas what I could rent in some other place for $2000 would only cost $100,000. The $100,000 unit shouldn't cost as much as the $300,000 unit to maintain.

Based on the fact that depreciation is forced, I don't really see how it's possible to not incur a loss on paper.

A $260,000 property here, if you're lucky will rent for maybe 1600. So basically you'd be doing well to scratch on the expenses. Thus the benefit you'd get is to defer taxes for as long as you own the property, and to own a hypothetically appreciating asset in a leveraged way.

Maybe this area is just weird but there's no way I could make over $3,000 a month renting out a $260,000 property, so there's absolutely no way I could have a profit on a schedule E at the end of the year. Unless I had enough money to buy the property outright, but that would defeat the whole purpose of real estate investing.

My wife and I are looking into shopping for a rental property. However, our AGI is above $150,000 a year, and neither one of us is a real estate professional.

Because of that, it looks like I would not be able to deduct any rental property loss against our regular income if I owned a rental property in the "normal way" (schedule E).

My question is whether or not it is possible to get around this by forming either an LLC or an S-Corp. It looks to me like if I did that, the net income/loss would be recorded on schedule C instead of schedule E, which seems to not be subject to the passive loss limits. However, I can't find any really good information about this anywhere.

Thanks for any replies, I've been searching for answers online for a couple hours and haven't found any that address this specific issue!