RENTAL REAL ESTATE INDIVIDUAL INVESTOR EXCEPTION:
01.Core Concepts
EXAMPLE • Ralph and Lauren, a married couple, have AGI of $138,000 and have a loss of $30,000 from rental real estate property. Since they are beyond the $100,000 in AGI, they can only deduct 50 cents for every dollar of loss that they are below the $150,000 phaseout. • $150,000 - $138,000 = $12,000 ÷ 2 = $6,000 deduction • Therefore, they can deduct $6,000 against ordinary income. The remainder of the loss is suspended under the passive activity rules.