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Old 04-17-2012, 12:46 PM
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Line 17 1040 as a negative number

I have had a loss on my schedule E for my rent house. Part II, III, and IV do not pertain to me. Do I transfer the number to line 17, 1040 as a negative number and subtract it from my income?



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Old 04-17-2012, 04:13 PM
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“I have had a loss on my schedule E for my rent house. Part II, III, and IV do not pertain to me. Do I transfer the number to line 17, 1040 as a negative number and subtract it from my income?”-------->it depends. As long as you have a loss on rental property, line 17 on 1040 is this the correct place to report that loss. however, if you own part or all of an income property and do not actively participate in the management of the property, you are not allowed to write off any rental losses in the year of the loss on your tax return unless you have other passive activity income. Your rental losses build-up from year-to-year until you have rental income to offset the losses or you sell the property. When you sell the property, you can write-off all unused rental losses that have accumulated while you have owned the property. for most folks, the tax law limits rental property losses from offsetting other income when their MAGI exceeds $150,000. The limitations have been around for more than 20 years. A rental real estate activity is considered a passive activity. Losses from continuing passive activities can only offset income or gains from passive activities. When a passive activity is completely disposed of in a fully taxable transaction, any unused losses can be offset against other income.If you or your spouse actively participated in a passive rental real estate activity, you can deduct up to $25,000 loss from the activity from your nonpassive income.This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. The maximum amount of the special allowance is reduced if your MAGI is more than $100,000. Any losses you cannot claim currently are accumulated and carried over to future tax years. The accumulated carry-forward losses are allowed in future years under the following circumstances. Real estate professionals can write-off all rental losses in the year of the loss on their tax return. No rental losses are carried forward, they are written off in the year of the loss. You must meet IRS guidelines to claim real estate professional status. The IRS guidelines for claiming real estate professional status can be complicated depending on your situation. Be sure to consult with your accountant or attorney to determine if you qualify to claim real estate professional status.



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