Anwar owns a rental home and is involved in maintaining it and approving renters

Question

Anwar owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $17,300 from renting the home. His other sources of income during the year were a salary of $120,000 and $12,700 of long-term capital gains.

How much of Anwar

Anwar owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $17,300 from renting the home. His other sources of income during the year were a salary of $120,000 and $12,700 of long-term capital gains.

Explanation / Answer

Hi,

Please find the answer as follows:

Maximum Deduction before Phase Out = 25000

Phase out of Maximum Deduction = (120000 + 12700 - 100000)*.5 = 16350

Maximum Deduction in Current Year = 25000 - 16350 = 8650

Rental Loss (Current Year) = 17300

Rental Loss (Deductible in Current Year) = 17300 or 8650 whichever is lower.

Answer is 8650.

Thanks.

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