Does rental deduction deducted from only rental income or the entier income including W2 income for example

Forum|Forum|6 years ago
June 3, 2019
1 reply
0 views

I've spent money on a property I bought but never got the chance to rent it last year, would I be able to claim/deduct any of these expenses ?

Also does expenses on improvement comes from the over all income including income from W2 or just from the rental property income ?

TurboTax Deluxe Online

ChelsiE2

Employee

Rental expenses are taken against associated rental income amounts. If these expenses are greater than the income, this is called a Rental Loss.

A Rental Loss can only be used to offset other income reported on your tax return if you are an Active Participant in that rental property. In this case, you would be allowed to deduct up to $25,000 worth of rental losses to be offset against other income items on your tax return (such as your W-2 wages).

The IRS defines an Active Participant as: "You (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fidesense. Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions."

For more information, please see: IRS Publication 527