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Originally posted by HardDrive
Our income is over 150k. So I can not write off ANY losses!?!?!?! Arg.
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I don't make $150k, so I'm not positive, but as your adjusted income reaches and exceeds $150k, your losses are minimized or eliminated. However, you may be able to carry losses forward. Dunno if that is any consolation.
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Hmmmmmm......but can't I buy all sorts of 'materials' and perhaps even a vehicle, to ensure that I don't make a profit. If I buy truck that is only used for property managment (and pulling my boat trailer *AHEM*  ), can't I write off the payments?
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You still have to pay $1 for those materials to get a deduction of 10-50 cents. Send me $50000 and I'll send you a cashier's check for $25k. No bets required, and you don't have to send your check to Lubemaster or Cool-chick.
Your vehicle can be expensed, but only to the extent it is used for business (rental property) purposes. If you drive 15k miles in one year, and only 1000 miles is for your rentals, then you may only deduct 1000 miles. Same applies if you depreciate the vehicle, instead.
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What about interest form the additional mortagages. I know its only a percentage, but I can write that off to, correct?
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Mortgage interest, depreciation, property taxes, insurance, maintenance expenses, management expenses, advertising, hired labor, and materials, etc are all deductible, but if you buy quality properties, these deductions will be offset by rental income. In the end, you may only see a paper loss of a few thousand dollars per year. For example, on a $125k rental property @ $1250/month rent, your Schedule E might show a loss of perhaps $3000-6000.
As I said before, RE investing is best when considered over the long term. Over time, those rentals will be free and clear and will be throwing off rental incomes. Rental income is exempt from SS/Medicare. Additionally, over the long-term, RE (values and rents) adjusts for inflation. Then, you quit or reduce your hours and enjoy life.