Question

High earned income/deducting rental expenses

Forum|Forum|4 years ago
July 12, 2021
1 reply
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My husband and I earn around $260k and have a 2nd home which we have just turned into a rental property. Am I able to write off the expenses associated with the income from that rental property? If I am not and just have to wait till we sell it to take those losses, do I have to pay taxes on the current income since I can't deduct the losses?

Carl11_2

Employee

When your income is over a certain threshold ($160K I think) then your rental losses are limited. You will still claim all rental expenses on your tax return each and every year. However, if the AGI is to high it may not be allowed. But you still claim it. (If you don't claim the expense in the year it's incurred,, then you may never be able to deduct it later).

Your unallowed losses will be carried over each year until such time your AGI allows you to deduct it, or when you sell or otherwise dispose of the property in a future year.