If your rental property shows a loss for the year, you want to deduct that loss against your other income.
In the good ol’ days (before the Tax Reform Act of 1986), you always did that. And when you did that, your after-tax rate-of-return from the rental increased.
With the loss deduction subsidy, your government helped you grow your rental property profits.
You still can use the loss deduction subsidy benefit on your rental properties if you can jump over the passive-loss hurdles.
Example. You have $50,000 in rental property losses this year, but you fail the passive-loss rules; therefore, your current-year deduction for the losses is zero. That’s ugly, isn’t it? Sadly, it’s also true.
If you own rental properties and want to deduct rental losses, you absolutely, positively must have a handle on the passive-loss rules.
This article will help you understand and plan your rental property activities for tax deductions by giving you insights from the Miller case.
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