My client had a surge in income in 2020 putting them over $150,000 and was not able to write-off their $8,000 rental income loss. Next year they will be well below $150,000. Will they be able to write off the loss next year or will they have to wait until the passive gains to offset it? They don't plan on selling it nor will they have any passive income gains in the near future. Thanks for the help.
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Generally, rental property losses that are not deductible are suspended passive losses. These deductions are not lost forever. Your client can carry forward the loss indefinitely until there is rental income (or other passive income) he/she can deduct them against, or the entire interest in the property is disposed off. Of course there are exceptions for real estate professionals etc. -
Thanks Sudhir. This is not a tax professional and I didn't want to assume I was missing an exception.
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