Ilene rents a property for the entire year. During the year, Ilene reported a net loss of $18,700 from the rental. If Ilene is an active participant in the rental and her AGI is $141,000, how much of the loss can she deduct against ordinary income in the year?

Question

Quizplus · Accepted Answer

Ilene can deduct up to $25,000 of rental real estate loss against ordinary income if her AGI is $100,000 or less. However, this deduction phases out between $100,000 and $150,000 AGI. Since Ilene's AGI is $141,000, she is $41,000 over the $100,000 threshold. The deduction is reduced by 50% of the amount over $100,000, which is $20,500 ($41,000 * 50%). Therefore, the deductible loss is $25,000 - $20,500 = $4,500.

Ilene Rents a Property for the Entire Year