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Rental Advantages

Sell Your Rental Now and Harvest Your Losses 

One drawback of owning rental property is “suspended unused passive losses.” For many owners, the rentals are considered a passive activity and not their main job. 

If for example, your income is over $150K and you are married filing joint, you cannot deduct rental losses against your regular income. This loss you have is “suspended” until you sell the property or have a positive rental income to offset the loss.  

With loss harvesting, you wait until you have some other regular income to offset, and you decide to sell the rental building and then you can deduct the suspended passive loss against your regular income. 

Another loss harvesting method is to sell off losing stocks and offset the losses against the existing gains to get the gains down to zero. 

Special $25K Rental Loss Allowance 

For taxpayers that make less than $100K (MFJ), there is a special rule that allows a landlord to deduct $25K of passive rental losses against ordinary income if they actively participate. 

Also, if your income is between $100K and $150K (MFJ),  

You get to deduct a reduced amount. There is a formula. If your income goes over $150K MFJ, there is no more special loss allowance.   

The above limits are reduced to ½ if Married filing separate or single.