Tax Law (Questions About Taxes)/rental losses


I have 2 rental buildings in the state I live (and I actively manage them myself) and one in California where I use a management company.  I have a positive net income from the 2 buildings in my state but the one in CA has a negative net income (-$13,000).  Adding the 3 buildings together gives me a positive net income.
My MAGI(modified adjusted gross income) is $161,000.  As I understand it because my MAGI >$150,000 I cannot deduct the $13,000 loss on schedule E.  I could be considered a professional real estate investor on the other 2 properties but not the one out of state in CA where a management company runs it. So I don't think I can use that exception?

So my question is:  Is there any way I can deduct this $13,000 loss? And if I can't what happens to it? Can I use it in a future year where my MAGI <$150,000?



Thanks for your question.

Although each rental activity normally stands on its own, as a real estate professional, you may elect to treat all rental activities as a single unit. To make the election, the taxpayer must file a statement with the original income tax return declaring that he or she is a qualified taxpayer for the taxable year and is making the election to treat all
interest in rental real estate as a single rental real estate activity pursuant to IRC section 469(c)(7)(A). The election is binding for the taxable year it is made and for all future years whether or not the taxpayer continues to be a qualifying taxpayer. A taxpayer may revoke the election only in the taxable year in which a material change in facts and circumstances occurs. [Reg. §1.469-9(g)(3)].

Any unused passive losses may be carried forward indefinitely until used.  If the property is sold in a fully taxable transaction with remaining unused losses, they may be deducted at that point.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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