Rental Income & Real Estate (2025)

Passive activity rules, depreciation, and the $25,000 special allowance for active landlords (subject to phaseouts).

Passive Activity & Material Participation

Rental activities are generally passive, but if you materially participate you may deduct losses against other income. Check material participation tests.

Depreciation & Basis Recovery

Residential rental property is depreciated over 27.5 years (straight-line). Section 179 and bonus depreciation have limited application to real property.

Special Allowances

The $25,000 special allowance for active participation phases out at higher MAGI; consult 2025 thresholds for exact phaseouts.