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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 585
Experience:  10 years experience
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Last year, because my income was gh I could not receive any

Customer Question

last year, because my income was high I could not receive any credit for the personal property tax paid on my rental homes (about 6000). Is there a way to get to claim this. If I separate my personal taxes from business taxes or made the rental properties an LLC would I get more tax breaks.
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

Property tax deduction is not a credit, it is a deduction. It reduces the rental income and create passive losses. If you couldn't claim you losses last year because of high income, you can carryover over the loss into future years or use it to reduce your other passive income (income from sale of investment).

Creating a single member LLC will not change your tax reporting, the passive loss deduction limits will still apply, meaning you will still not be able to deduct the losses if your income is over 150K.

Expert:  emc011075 replied 1 year ago.

It is actually a quite common problem for high income earners. The only way to deduct rental losses with high income is to be come real estate professional. As RE professional your loss would not be subject to passive loss limitation and you would be able to deduct all your losses.

More here:

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Passive-Activity-Loss-ATG-Exhibit-2-4-Real-Estate-Professionals