The passive loss limits contain an exception related to real estate activities that is not restricted to real estate professionals. This exception allows individuals to deduct up to $1 of losses from real estate rental activities against active and portfolio income. The potential annual deduction is reduced by 1 percent of the taxpayer's AGI in excess of

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9 January, 21:55

The passive loss limits contain an exception related to real estate activities that is not restricted to real estate professionals. This exception allows individuals to deduct up to $1 of losses from real estate rental activities against active and portfolio income. The potential annual deduction is reduced by 1 percent of the taxpayer's AGI in excess of

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Kameron Guzman · Answer 1

The second exception allows individuals to deduct up to $25,000 of losses from real estate rental activities against active and portfolio income. This deduction is lowered by 50% of the individual's AGI in excess of $100,000. This entire deduction is completely phased out if the individual's AGI reaches $150,000. For married couples filing separately, this deduction is lowered to $12,500 and starts to phase out at an AGI of $50,000.

In order to qualify for this deduction, the individual must own at least 10% of all interests in the real estate activity for the full year, and he/she must actively participate in the activity.