Question

Kyle actively participates in the rental of a home he owns. Kyle's AGI for the year is $75,000. He has a loss from his rental property of $20,000. How much of the loss can Kyle deduct on his income tax return this year

Answer 1

Kyle can deduct $20,000 loss from his income tax return this year.

Step-by-step explanation:

a) Data:

Kyle's AGI = $75,000

Rental property loss = $20,000

Maximum AGI for maximum loss deduction of $25,000 = $100,000

This is because Kyle's adjusted gross income (AGI) is less than $100,000. The maximum loss deductible for rental income is $25,000.

b) The federal tax law allows for a rental income loss deduction to taxpayers who own and rent property in the U.S. The law stipulates that up to $25,000 may be deducted as a real estate loss per year as long as the individual's adjusted gross income is $100,000 or less.