Small landlords: You may be eligible for a valuable tax break. Unless you’re a “real estate professional” for tax purposes, rental losses are typically treated as passive and can’t offset nonpassive income, such as wages or business income. But some landlords may deduct up to $25,000 in rental real estate losses against other income each year. To qualify, you generally must own at least a 10% interest in the property and actively participate in management (such as authorizing repairs and setting lease terms). This exception begins to phase out when modified adjusted gross income (MAGI) exceeds $100,000 and is eliminated when MAGI reaches $150,000. We’re here to help if you have questions.
