Rental Properties

Investing in rental properties through platforms like arrived.com means you'll report your share of rental income and can claim corresponding deductions. Common deductions include depreciation, property taxes, mortgage interest, insurance, and operating expenses such as management fees. Depreciation, a non-cash deduction, can be substantial. These deductions can reduce your taxable rental income. However, rental real estate is generally considered a passive activity. This means any losses generated from these investments can typically only offset income from other passive activities. They generally cannot offset "active" income like wages or portfolio income (e.g., stock dividends). While the deductions can significantly lower your taxable rental income, the ability to use losses to reduce *other* types of income is often restricted, especially for hands-off, fractional investments where you are unlikely to materially participate. So, while the properties generate deductions, their immediate impact on reducing your overall taxable income from non-passive sources may be limited.