Should I SELL or RENT my home?

[H200h]

@ratbert2k

@H200h

Please enlighten us on the wrongness of SS’s first post. In the context she wrote it, I don’t see it.

You can use business losses to offset ordinary income up to $3,000/yr. Property tax, mortgage interest, and HOA fees (as well as the big one–depreciation) go into that calculation for a rental property.

@SonoranSilkies

I’m not sure you can do that with a property that isn’t your primary residence.

Also, the implication of the post is that you can do that with a property that is your primary residence, which is even more wrong.

Unless you jump through some pretty high hoops, rental income is passive income. Passive income losses cannot be used to offset earned income. A salary is earned income.

SS’s statement regarding private home property taxes was correct, so you’re half right…

[H200h]

@ratbert2k

Not quite. Passive income can offset earned income, but is subject to a $3,000/yr limit.

I’m no tax expert but…I think you are confusing “passive income” with “capital income.” they are not the same.

The $3,000 limit toward earned income applies to “capital income” losses. Capital income is income generated with capital, not RE rentals.

The limit on “passive income” losses is generally limited to passive income sources or… you might be able offset your personal earned income… IF, you can manage to jump through a myriad series of hoops (like a ridiculously low MAGI.)

For anyone with a regular earned income, it’s just about impossible, and in the case of the OP it would be a non-starter. See link below:

Passive Activity Loss Rules: Definition and When You Can Use Them

[H200h]

@ratbert2k

Perhaps you’re considering $100,000 a ridiculously low MAGI?

In this case Yes, $100k is a ridiculously low MAGI, here’s why:

1. The average median Johns Creek household income (ages 25-64) is $135,489.
2. To qualify for the original 2012 purchase price the OP would have to have an income around $140K-$160K. That income would be higher than that today, probably $160K-$200K.

Context matters… your experiences may differ from the the OP’s.

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[H200h]

@ratbert2k

MAGI is less than household income, so I wouldn’t think it would necessarily be a stretch. Certainly not enough of a stretch to write it off completely.

Again, context matters. At $160K annual household income the OP is in the top twenty percentile of US taxpayers. About 87% of US taxpayers use the standard deduction. It’s highly unlikely that the OP had a MAGI as low as $100K for a joint filing, much less $50K for a married filing single return.

To qualify for the under $100K MAGI, the OP would have to have over $60K in legitimate deductions and couldn’t deduct foreign taxes and other deductions allowable under AGI rules. MAGI income is never less than AGI.

IMHO it ain’t gonna happen. But, maybe the OP is tuned in and he could answer the question for us.