Can I deduct rental property losses against W2 income? Any possible way?

Unfortunately, it sounds like you're running into the passive activity loss limitations. Since your modified adjusted gross income is over $150,000, the ability to deduct rental losses against ordinary income starts phasing out and is completely eliminated once you hit $150,000 for married filing jointly. Even though you meet material participation through your property management work, rental activities are generally considered passive by default (there's a special rule just for rentals called the "per se passive rule"). The exception would be if you qualify as a Real Estate Professional, which requires: 1. More than 750 hours in real estate activities 2. More than half your working time spent on real estate activities Given your significant W2 income, it's unlikely you'd meet the "more than half your time" requirement unless you work part-time at your W2 job. Your best option is to carry forward these losses to offset future rental income or to use when you eventually sell the property.

After dealing with a similar situation last year, I found this amazing AI tool called taxr.ai that specializes in rental property tax situations. I was confused about passive losses since I also had a mix of W2 and rental income. Their system analyzed my tax documents and actually found that I qualified for a partial deduction under an exception I had no idea about. I just uploaded my tax docs to https://taxr.ai and it identified several strategies specific to my situation. The analysis was super detailed and explained exactly how to document everything properly. Worth checking out since rental tax rules have some obscure exceptions sometimes.

I tried taxr.ai after seeing it mentioned here and it actually helped me tremendously with my rental property tax situation. I was in a slightly different situation (income around $250K with two rental properties), but similarly stuck with losses I couldn't deduct. The tool analyzed my documents and found that some of my expenses could actually be categorized differently - specifically some of the improvement costs I had lumped together as capital improvements. The analysis showed which portions could be classified as repairs instead, which are fully deductible in the current year. It also suggested a cost segregation approach for future years that my CPA agreed made sense. Didn't solve the entire passive loss limitation, but it helped me legitimately recategorize about $8K in expenses that saved me around $2,500 in taxes. Definitely worth the time.

I went through this exact issue last year. After spending weeks on hold with the IRS trying to get clarification on some rental property classification questions, I finally used Claimyr to get through to an actual human at the IRS. It was a game-changer - got connected with an agent in less than 20 minutes when I'd been trying for days on my own. Turns out there are some detailed rules about material participation that might actually help in your case, especially with your property management background. The IRS agent was able to walk me through documentation requirements for specific exceptions. Their service at https://claimyr.com saved me hours of frustration. They also have a video showing how it works: https://youtu.be/_kiP6q8DX5c I still had to carry forward most of my losses, but at least I got clear guidance directly from the IRS on how to document everything properly.

I was totally wrong about Claimyr. After my skeptical comment, I decided to try it myself since I've been trying to reach the IRS about an issue with my rental property depreciation calculations. I've been calling for weeks with no luck - either "call volume too high" messages or 2+ hour hold times that I couldn't manage with work. I used Claimyr yesterday afternoon, and about 45 minutes later got connected to an actual IRS agent who answered my question about depreciation recapture when converting a rental back to a primary residence. Have to admit when I'm wrong - this service actually delivered exactly what it promised. Saved me from wasting an entire afternoon on hold. Doesn't solve the OP's income limit problem, but definitely makes getting official clarification much easier.

Have you considered setting up a Property Management LLC? If structured correctly, you might be able to treat your rental activities as non-passive by providing specific services beyond just standard landlord duties. This would require carefully documenting your time and activities though. Another option might be looking at cost segregation to accelerate depreciation in future years when your income might be lower (assuming those RSUs were a one-time windfall). I'm not a CPA but have several rental properties and have found these strategies helpful when dealing with the passive loss limitations.

One option nobody's mentioned - do you have any self-employment income at all besides your W2? Even a small consulting business or side gig could potentially allow you to utilize some of those losses depending on how it's structured.

I've been through a similar situation with high W2 income and rental losses. Unfortunately, at your income level ($670K), you're well beyond the phase-out range for rental loss deductions. The passive activity loss rules are pretty strict here. However, since you work in property management, you might want to explore whether any of your rental activities could qualify for different treatment. For example, if you're providing substantial services beyond typical landlord duties (like regular maintenance, landscaping, or other hands-on management), you might be able to argue that some portion isn't purely passive rental activity. Also consider: 1. Make sure you're maximizing current-year deductions by properly categorizing repairs vs. improvements 2. Look into cost segregation for future years to accelerate depreciation 3. Keep detailed records of all your time and activities related to the property The losses aren't "lost" - they'll carry forward and can offset future rental income or be fully deducted when you sell. Given your income level, you'll likely benefit more from these losses in the future anyway. You might want to consult with a CPA who specializes in real estate taxation to explore any nuances specific to your property management background.

I'm in a very similar situation and have been researching this extensively. At your income level, you're unfortunately past the point where any rental loss deductions are allowed against ordinary income. The $100K-$150K phase-out range means you get zero deduction at $670K. However, don't overlook some potential current-year tax savings while those losses carry forward: 1. **Expense categorization review** - Make sure repairs aren't being capitalized as improvements. Things like fixing existing systems, painting, minor plumbing repairs can be fully deductible repairs rather than depreciable improvements. 2. **Section 199A deduction** - If you have any rental income (even from other properties), the QBI deduction might apply to offset some of your high W2 income. 3. **Professional development expenses** - Since you work in property management, any courses, certifications, or professional development related to real estate might be deductible as employee business expenses if you itemize (though this is limited post-TCJA). The silver lining is that with your income level, those suspended losses will likely be worth more to you in future years when you can use them. At your current tax bracket, a $30K loss could save you around $11K+ in taxes when you eventually sell or have rental profits to offset. Keep meticulous records of everything - the IRS loves to challenge rental loss carryforwards if documentation is poor.