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Rental loss calculator: how much of the $25,000 allowance can you use?

Enter your rental's numbers and your modified adjusted gross income (MAGI). The calculator estimates how much of the rental loss you can deduct against your salary this year and how much carries forward. It runs in your browser, so nothing you type is sent anywhere.

Schedule E result–

Your maximum allowance–

Deductible this year–

Carried forward–

Step	Amount

The calculator is only as good as the Schedule E number you feed it. Landlord Ledger totals rent, every expense category and depreciation for each property, so you know your real net result before you sit down with Form 8582 or your preparer.

Get Landlord Ledger — $12 Depreciation calculator

How the calculation works

Net result: rental income − expenses − depreciation. A positive number is passive income, and there's nothing to limit.
Total loss to deal with: this year's loss plus suspended losses from earlier years, minus net income from other passive activities (passive income absorbs passive losses first).
Allowance: $25,000, reduced by 50% of MAGI above $100,000, reaching zero at $150,000. Married filing separately and living apart all year: $12,500, phasing out between $50,000 and $75,000. Living together at any time: zero. Without active participation: zero.
Result: the smaller of the loss and the allowance is deductible this year. The rest is suspended and carries forward with no time limit.

Worked example

Rent $18,000, expenses $14,500 and depreciation $7,600 give a Schedule E loss of $4,100. With MAGI of $120,000 the allowance is $25,000 − 50% × $20,000 = $15,000, so the whole $4,100 is deductible. At MAGI $160,000 the allowance is zero and the $4,100 carries forward to a later year or to the year you sell.

This is a simplified estimate of Form 8582. It doesn't cover real estate professional status, short-term rentals with an average stay of 7 days or less, the separate rules for rehabilitation and low-income housing credits, or several rentals with different participation. MAGI here means adjusted gross income figured without passive losses, IRA deductions, taxable Social Security and a few other items. See the Form 8582 instructions or ask a tax professional.

Frequently asked

What counts as active participation?

Owning at least 10% of the property and making management decisions in a significant and bona fide sense: approving tenants, setting rent, approving repairs and capital spending. Using a property manager is fine if you make those decisions.

What happens to the loss I can't deduct?

It is suspended, not lost. It carries forward with no time limit, can offset passive income in later years, and is released in full when you dispose of the property in a fully taxable sale to an unrelated party.

Is the $25,000 limit per property?

No. It is one allowance per taxpayer (and per married couple filing jointly) for all actively managed rentals together.

Are the $100,000 and $150,000 thresholds adjusted for inflation?

No. They have been fixed since the passive activity rules were introduced in 1986, which is why more landlords hit the phase-out every year.

Sources: IRS Publication 925 (Passive Activity and At-Risk Rules), Instructions for Form 8582, Publication 527. This calculator is for estimating, not tax advice.