I started renting out my house last year for the 1st time and I'm starting to think about filing taxes. Rent is $2400/month, PITI is $1500/month.
I heard at some point you can deduct depreciation from rental income to offset it. But I'm reading that you have to make under $100k. I make $145k and my wife makes $65k, does this mean I'm out of luck? Please ELI5.
Using depreciation on a rental property to offset rental income?
byu/New_Contribution_226 inRealEstate
Posted by New_Contribution_226
7 Comments
Eli5= use freetaxusa and fill in the boxes
You can still deduct depreciation, regardless of income, it’s just that you are limited in how much rental loss you can use against w2 income. Do you expect to be at an overall loss with the rental?
Have someone do your taxes this year. No need to establish a depreciation basis and show you what you can deduct and what you can’t deduct. You can do your taxes yourself the next year, it’s since it’s basically going to be doing the same forms just with different numbers, but have a pro do it this time.
Keep in mind, depreciation recapture tax when you sell this property.
FreeTax has easily figured my depreciation for about 5 years now. The only thing you need is the approximate value of the house without the land value.
There are no income limits set in order to normally depreciate a capital good.
You’re conflating IRC §469(i) AGI limits. At $210k AGI (MFJ), you’re well above the $150k phaseout for the $25k special allowance. Your rental losses are suspended under §469 passive activity loss rules. You still take depreciation, but losses carry forward as suspended passive losses until sale or offsetting passive income.
Clear as mud?