The formulas
- Allowance = $25,000 - 50% x (modified AGI - $100,000), not below zero
- Married filing separately, lived apart all year: $12,500 and $50,000 in place of $25,000 and $100,000
- Deductible = lesser of the net rental loss and the allowance
How it works
Section 469(i) lets an individual who actively participates in rental real estate deduct up to $25,000 of losses against other income. The allowance shrinks by 50 cents for each dollar of modified AGI over $100,000, so it is gone at $150,000. Active participation requires an interest of at least 10 percent by value, including a spouse.
Modified AGI is computed without regard to passive losses and certain exclusions. A married person who files separately and lived with a spouse at any time during the year gets no allowance under section 469(i)(5)(B), so this tool covers only those who lived apart all year. Losses you cannot deduct stay suspended for later years.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
What counts as active participation?
The statute denies it if your interest, with your spouse, is less than 10 percent by value of all interests in the activity.
Does this cover all passive activities?
No. It covers the $25,000 rental real estate offset only.
Where does the unused loss go?
It stays a suspended passive loss and can be used in later years under the passive loss rules.
Sources
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.