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Old 03-28-2016, 01:30 AM
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Rental Property and Ordinary Income deductions

Hello All,

I am a Real Estate Professional (licensed and in practice for 5 consecutive years now); it is my classification on my Tax Returns and my profession.

I own a rental property on my PERSONAL name in which I tend to for management monthly. I'm also a full time property manager to boot for other properties.

Annually, my rental property results in several thousand$ in losses annually via Rental Income Vs. Liabilities = N.O.L. from Real Estate

My Question:

#1 - Having prefaced the above, am I able to utilize the annual loss (NOL) from my rental property on my personal name AGAINST my ORDINARY INCOME that I receive via a K-1 from my LLC?

#2 - If I am able to use my rental losses against my ordinary income via my K-1 from my LLC, can I carry forward any unused losses? - And if "Yes" how many years?

Thank you all in advance for the time taken in reviewing this question and replying.

David


Last edited by [email protected] : 03-28-2016 at 01:42 AM.


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Old 03-28-2016, 08:53 PM
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#1 - Having prefaced the above, am I able to utilize the annual loss (NOL) from my rental property on my personal name AGAINST my ORDINARY INCOME that I receive via a K-1 from my LLC?======>Correct(actually your rental losses are not NOL; they may cause you NOL as you are a r/e pro on your SCh C aslongas you fiel SChC /Sch SE of 1040.as you can see, unless you area r/e pro, your Rental Losses Are Passive Losses ( I mean Rental losses are always classified as "passive losses" for tax purposes. This greatly limits your ability to deduct them because passive losses can only be used to offset passive income);however,
you, as a rental Property owner with modified adjusted gross incomes of $100K or less, may deduct up to $25K in rental real estate losses per year aslongas you "actively participate" in the rental activityby being involved in meaningful management decisions regarding the rental property and have more than a 10% ownership interest in the property. This allowance is phased out for you whose MAGI exceeds $100k and eliminated entirely when it exceeds $150k. Thus, it is useless for high-income landlords.

#2 - If I am able to use my rental losses against my ordinary income via my K-1 from my LLC, can I carry forward any unused losses? - And if "Yes" how many years?==========>>>>>yes and indefinitely until you claim the loses against your ordinary income; however, when you sell the rental pty at a loss then you do not need to recapture the unrecaptured sec 1250 depreciation taxed as ordinary income. ALSO, unless you are a real estate pro, you need to report your rental gains / losses on Sch E of 1040. If you have a loss to carry over, you also fill out Form 8582 and 6198 and report the final results on your 1040. Next year, if you have more passive income, you can write off this year's excess loss, or at least deduct part of it. Whatever you can't claim, you carry forward again until you claim it



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Old 03-28-2016, 09:01 PM
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Quote:
Originally Posted by [email protected] View Post
Hello All,

I am a Real Estate Professional (licensed and in practice for 5 consecutive years now); it is my classification on my Tax Returns and my profession.

I own a rental property on my PERSONAL name in which I tend to for management monthly. I'm also a full time property manager to boot for other properties.

Annually, my rental property results in several thousand$ in losses annually via Rental Income Vs. Liabilities = N.O.L. from Real Estate

My Question:

#1 - Having prefaced the above, am I able to utilize the annual loss (NOL) from my rental property on my personal name AGAINST my ORDINARY INCOME that I receive via a K-1 from my LLC?

#2 - If I am able to use my rental losses against my ordinary income via my K-1 from my LLC, can I carry forward any unused losses? - And if "Yes" how many years?

Thank you all in advance for the time taken in reviewing this question and replying.

David
PS aslognas you file Sch C as a r/e pro, you may claim the whole rental losses on SCh C and it may cause you an NOL ;nOL you can carry a loss forward for up to 20 years or backward for upto 2 years.



passive losses called suspended passive losses are carried forward indefinitely until either of two things happen:
you have rental income (or other passive income) you can deduct them against, or you dispose of your entire interest in the property



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Old 03-28-2016, 09:22 PM
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Join Date: Oct 2010
Posts: 5,231
Quote:
Originally Posted by Israelibroker[email protected] View Post
Hello All,

I am a Real Estate Professional (licensed and in practice for 5 consecutive years now); it is my classification on my Tax Returns and my profession.

I own a rental property on my PERSONAL name in which I tend to for management monthly. I'm also a full time property manager to boot for other properties.

Annually, my rental property results in several thousand$ in losses annually via Rental Income Vs. Liabilities = N.O.L. from Real Estate

My Question:

#1 - Having prefaced the above, am I able to utilize the annual loss (NOL) from my rental property on my personal name AGAINST my ORDINARY INCOME that I receive via a K-1 from my LLC?

#2 - If I am able to use my rental losses against my ordinary income via my K-1 from my LLC, can I carry forward any unused losses? - And if "Yes" how many years?

Thank you all in advance for the time taken in reviewing this question and replying.

David
sorry my bad cofusion; a you reant residential ,NOT eqiuipment or machinery or etc you needd to file sch E or your MMLLC needs to fiel f8825 and report it on sch K1 fo 1065 and on your 1040, NOT on your SCh C sorry about this and as said the losses may cause youNOL



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