Tax loss harvesting & AMT

[calmloki]

Thanks to some property sales it looks like we're going to get tapped by the AMT fairy's magic money extracting wand. By dint of carefully buying individual stocks at the maximum buzz moments we seem to be holding some stocks which are worth less now than when we bought them. Our tax lady is on vacation, so I'm asking you all about this cunning scheme: Sell the losing stocks to reduce our AGI. Would that reduction in AGI result in a dollar for dollar drop in amount taxed by AMT? I'm also thinking about having the weather 1/2 of a roof replaced on a rental - lost shingles on an old roof - rather than doing the whole thing, thus moving more money into the maintenance column rather than depreciating the cost of an entire replacement.
Any other enhancements to reduce the AMT hit would be appreciated, as well as thoughts on whether the above machinations would be of any effect.
We're pretty much all rental property income and any dollars saved are more likely to go into Wellington than SBUX.
Thanks

 

[Martha]

Yes you still can offset your capital losses against your real estate capital gains and this will reduce your income and thus reduce the amount of tax you will pay, whether AMT or otherwise.

Rental expenses can also continue to be deducted against rental income.

As we rid ourselves of our rental property we were hit with AMT for a number of years. There is only so much you can do.

 

[calmloki]

Thanks Martha - "There is only so much you can do". I'd like to do what we can though... Avoid avoid avoid. Another thought I'd had, triggered by her saying that not paying our Jan 15 quarterly state tax in December would increase our Fed income tax but decrease our AMT tax, was to not pay our state quarterlies for the rest of the year, then pay them all in Jan 2008 - dunno how much penalty we would have to pay the state and if the offsetting reduction in AMT would make that worthwhile or not. I'm just floundering about trying to do the smartest thing - so far I'm just happy to have used the term "tax loss harvesting" and to actually think it was used correctly!