Real estate professional offsetting Real Este losses against spouse's W-2 income

MRAMANNA · #1 (**permalink**) 03-07-2009, 01:14 PM

I own significant number of rental properties and earn income on them. My wife and I earn W-2 income. I am working on becoming Real Estate Professional (Broker) this year. As a real estate professional Can I offset Losses on my real estate properties against my spouses W-2 income? I have accumulated passive losses from past 3 years that is currently can not be offset against my W-2 income or my wife's W-2 income, as I am not a real estate professional yet.
Thanks.

TaxGuru · #2 (**permalink**) 03-08-2009, 01:40 PM

If your combined adjusted gross income <$150,000, you are entitled to deduct passive losses. 0therwise if your combined adjusted gross income is in excess of $150,000 your passive losses generated from your rental properties are non deductible and instead are considered suspended to future years.

In the future years if your adjusted income drops below the $150,000 then these losses become unsuspended and you may be able to deduct these passive losses.

MRAMANNA · #3 (**permalink**) 03-08-2009, 01:49 PM

Quote:

Originally Posted by TaxGuru

If your combined adjusted gross income <$150,000, you are entitled to deduct passive losses. 0therwise if your combined adjusted gross income is in excess of $150,000 your passive losses generated from your rental properties are non deductible and instead are considered suspended to future years.

In the future years if your adjusted income drops below the $150,000 then these losses become unsuspended and you may be able to deduct these passive losses.

THis question is specifically pertaining to 'Real Estate Professional". Who ever answered this question answered for a person with less that 160K income for non-real estate professional.

Assumption: I am a real estate professional. I incurr 500,000 losses on real estate properties. Can it be offset against my wife's income? (Assumption my wify's income is equal to greater then losses. If not can we accumulate the passive income exceeding my wife's income?)
THanks