If you own rental property, you may have a loss for tax purposes in any given calendar year. Even if your cash flow from the property exceeds your outlays, non-cash deductions such as depreciation may result in a reported loss. In that situation, any cash you receive from that investment property won’t be subject to income tax.
What’s more, you may be able to deduct all or part of a tax loss from investment property on your personal income tax return. To do so, you must be actively involved in managing the property.
You can qualify as an active manager if you approve tenants, hire contractors for repairs, and so on.
* You can deduct a loss up to $25,000 if your adjusted gross income (AGI) doesn’t exceed $100,000.
* Over $100,000 in AGI, the maximum loss you can deduct drops $1 for every $2 over the limit.
* You can’t take any losses immediately if your AGI is $150,000 or more.
