Posted by David Krulac on October 13, 2003 at 16:33:06:
if you make more than $150,000 regular salary income, you are NOT eligible to take ANY passive losses. These losses may be out of pocket, but if anything they would be depreciation (not out of pocket). So say your earnings maintain the above $150,000 threshold and you keep the property for 10 years. Then when you sell ALL the accumulated passive losses, say for example they were $3,000 per year, or $30,000 for the ten year period. Than $30,000 would off set the first $30,000 of capital gains.
#2 income transferred to lower bracket. I miswrote!
TAKEN depreciation transfers your income from the ordinary income, for most people 28% or thereabouts to the capital gain rates of 15% for most people.