I have a rental property that usually loses money every year. My taxpreparer said that I dont get the benefit of the loss on my tax return becuase I make too much money. As of right now, I dont have any other options, as I cant sell it in this market and my income will be the same for a while. Any suggestions or creative ideas for me? My taxpreparer cant help me<br><br>Post edited by: Tim46, at: 2008/02/17 19:07

The IRC limits the amount of passive activity lossess (PAL) (i.e from sources like rental property) that a taxpayer can use to offset ordinary income (i.e. active income from wages or active business income). Taxpayers whose modifed adjusted gross income exceeds a certain amount (based on filing status) cannot use PALs to offset active income. PALs are considered to be a tax shelter. In your case it sounds like your PALs are suspended until your modified AGI is less that the threshold amount for your filing status, or until the property is disposed/transfered.

Taxpayers that qualify as a &quot;Real Estate Professional (REP)&quot; are not bound by the same passive activity loss rules as non-REPs. To find out whether you qualify as a REP, please see the attached link for more details and consult with your CPA or tax attorney to determine whether you satisfy all REP qualifications and consider all legal issues.
http://www.irs.gov/businesses/small/article/0,,id=146825,00.html


Good Luck.