If your depreciation + expenses is greater than the rental income, the excess "loss" will have to be carried forward until sale or your MAGI (i think it's magi) is below 150k.Seems like IRS doesn't want high income earners to be able to lower their high bracket taxes by buying up a bunch of real estate to reduce their other taxable income unless it has to do with that actual investment.Not a tax professional :)

There are exceptions, if you or your spouse are Real Estate Professionals, or your MAGI is under $150k.

Originally posted by @Sean Yang:@Derrick Dill If economy were really bad, why do you think renters would continue to pay rent?

Whether you are single or married filing jointly, the net passive loss allowance phases out at $150K MAGI.  

@June Yang connect with me and I'll share my story! 

"Management Decisions" consist of approving of new tenants, deciding on lease terms, approving expenditures, hiring contractors, etc.The real question regarding active participation is whether or not your Modified Adjusted Gross Income (MAGI), which is reported on your Form 1040, disqualifies you for the special allowance.

I am married filing jointly and our MAGI is below $100K, or just above it, after 401K contributions. 

I would just as soon suggest a target retirement fund with a very near date so it has a large measure of fixed income and bonds to offset the stock exposure...ying-yang with the market...as suggest an REIT.

Genie Investments - David Hughes, Mike ConnersMcMann Commercial Lending- Walt Trock and Michael LanzaSilversky capital out of Lubbock, TX.Jerry Yang and Guatam ShahSmartZip - Smart ZipAmerican Money Loan ServicesTom Vanderlaan.FLIP AND FAST LOANS LLC.

Hello @Sean Maginess, welcome to the site!