Question

Rental Property

Forum|Forum|6 years ago
March 7, 2020
1 reply
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I noticed that on my rental property every time I add an expense towards the rental property my Tax owed goes up, I thought expense on rental property should decrease the tax owed because i lowers the income received from the property. Is my thinking wrong? My income is in the$147000 range and I am Itemizing deductions .

A

Anonymous

you are probably subject to the passive activity rules for real estate. This only applies if there's a loss. look at form 8582. there is also probably a qualified business income deduction that for a profitable rental activity reduces taxable income. increasing rental expenses decreases this deduction and if a loss can completely eliminate it. you also may be in the alternative minimum tax where certain deductions do not reduce taxes.

we can't see your return so can't be sure exactly what's happening.