Passive Loss Phaseout Calculator

Passive losses phase out at higher income levels.

Passive loss

Modified AGI

Active participation (1=yes)

Deductible loss

$10,000

Suspended loss

$35,000

Allowance remaining

How the math works

Allowance = $25k below $100k MAGI, phased out to $0 at $150k. Deductible = min(loss, allowance).

$130k MAGI: allowance = $25k − ($30k/2) = $10k. Loss $45k: deductible $10k, suspended $35k.

How to Use

Enter passive loss from rentals.
Enter modified AGI.
Enter active participation (1=yes).
Read deductible loss.

Frequently Asked Questions

$25k allowance?

Actively participating taxpayers (not passive investors) can deduct up to $25k of rental losses against other income. Phases out $1 for every $2 of modified AGI above $100k. Completely phased out at $150k MAGI.

Real estate professional?

750+ hours per year AND >50% of personal service in real estate activities. Passive loss rules don't apply — all rental losses fully deductible. Must elect, document hours, qualify each year. IRS scrutiny heavy on REP status.

Suspended losses?

Losses disallowed by phaseout carry forward indefinitely. Recognized: 1) against passive income in future years, 2) on complete disposition of activity. Significant tax savings accumulate if planned well.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.