Harvey rents his second home. During 2014, Harvey reported a net loss of $35,000 from the rental. If Harvey is an active participant in the rental and his AGI is $80,000, how much of the loss can he deduct against ordinary income in 2014?

Question

Quizplus · Accepted Answer

If Harvey is an active participant in the rental activity and his AGI is below $100,000, he can deduct up to $25,000 of rental losses against his ordinary income. However, the amount of the deduction is gradually reduced if his AGI is between $100,000 and $150,000, and he is not allowed to deduct any rental losses if his AGI is above $150,000. Since Harvey's AGI is below $100,000, he can deduct up to $25,000 of the rental loss of $35,000 against his ordinary income in 2014.

Harvey Rents His Second Home