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Message
Rental property as a tax shelter
Posted on 7/19/12 at 1:57 pm
Posted on 7/19/12 at 1:57 pm
Guys--not great on terminology here, but looking for advice on how to shelter some of my tax liability. I have recently changed careers and I'm making nice size commission checks. My wife is a teacher and brings in a decent income--together we're bringing in $175,000 and will be faced with $30,000 in income taxes.
Any advice on how to get some of this money back? We have plenty of leftover every month and budget our lifestyles to where they don't include my commission checks, only my base salary.
I've kicked around rental property and use the depreciation on the property to cover up some of our tax liability and also for the sake of the asset another property would be. I don't need a strong positive cash flow off the property and I'm extremely handy when it comes to repairs and I have resources who can help with AC/Electrical/Plumbing emergencies.
what say you guys? I appreciate the advice!
Any advice on how to get some of this money back? We have plenty of leftover every month and budget our lifestyles to where they don't include my commission checks, only my base salary.
I've kicked around rental property and use the depreciation on the property to cover up some of our tax liability and also for the sake of the asset another property would be. I don't need a strong positive cash flow off the property and I'm extremely handy when it comes to repairs and I have resources who can help with AC/Electrical/Plumbing emergencies.
what say you guys? I appreciate the advice!
1
Posted on 7/19/12 at 2:25 pm to JoseVargasTX
Rental income is considered "passive activity."
You can only apply passive losses against passive income.....commissions & wages are not passive. So you can only net the losses against schedule K income from other businesses in which you do not actively participate. Also you're allowed to take a $25K passive activity loss if you actively manage the property; however the loss starts phasing out at $100K in AGI and is completely phased out at $150K in AGI.
You can only apply passive losses against passive income.....commissions & wages are not passive. So you can only net the losses against schedule K income from other businesses in which you do not actively participate. Also you're allowed to take a $25K passive activity loss if you actively manage the property; however the loss starts phasing out at $100K in AGI and is completely phased out at $150K in AGI.
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