Is there a limitation on the loss carryforward of passive losses?

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Losses from passive activities-activities in which the taxpayer doesn't materially participate, and most rental activities-may only be used to offset passive activity income (which doesn't include portfolio income); thus they can't be used to offset income from, for example, compensation, interest or dividends. Any losses that are unused in a tax year because of this rule are carried forward to the following year(s) until used, or until taxpayer disposes of the interest in the activity (or substantially all of the activity) in a taxable transaction. Passive activity credits may be used only to offset tax on income from passive activities, with a carryover of any unused credits. However, individuals who actively participate in rental real estate activities may use up to $25,000 of losses from those activities to offset nonpassive income; and those activities are not automatically passive for real estate professionals.


However, the 25K losses start to phase out for a married filing jointly taxpayers with AGI of $100k and are gone completely at $150K AGI...

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First answer by IamLostRU. Last edit by Wwwzz. Contributor trust: 0 [recommend contributorrecommended]. Question popularity: 19 [recommend question].