Question

Anwer owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $8,800 from renting the home. His other sources of income during the year are a salary of $120,750 and $20,700 of long-term capital gains.

How much of Anwer’s $8,800 rental loss can he deduct currently if he has no sources of passive income?

Answer 1

The provisions are given below:

(i) loss from house property can be set off against income from house property

(ii) Long term capital loss can only be set off against long term capital gains

(iii)loss from house property can be set off against income from salary

(iv) if loss from house property cannot be set off against any other income during the year, the same can be carried forward to the next year and can be set off against income from house property next year.

As per the above provisions,these rental loss can be first set off against income from house property.Since there is no income from house property during the year, the rental loss cannot be set off. If intra head adjustment not possible, then set off against inter head.So these rental loss of $8800 can be set off against income from salary of $ 120750 and not long term capital gain.