Ilene rents her second home.During 2018,Ilene reported a net loss of $15,000 from the rental.If Ilene is an active participant in the rental and her AGI is $140,000,how much of the loss can she deduct against ordinary income in 2018?

Question

Quizplus · Accepted Answer

If Ilene's AGI is between $100,000 and $150,000, she can deduct up to $25,000 in rental real estate losses if she actively participates in the rental. However, the amount she can deduct begins to phase out once her AGI exceeds $100,000 and is completely eliminated once her AGI reaches $150,000. In this case, Ilene's AGI is $140,000, so the phase-out applies, reducing the amount she can deduct by $1 for every $2 her AGI exceeds $100,000. Therefore, her maximum deduction is $25,000 - (($140,000 - $100,000)/$2) = $5,000.

Ilene Rents Her Second Home