# "The hardest thing in the world to understand is the income tax"

**URL:** <https://discussion.mainstreetbusinesspodcast.com/t/quot-the-hardest-thing-in-the-world-to-understand-is-the-income-tax-quot/97>\
**Category:** Tax Strategies\
**Created:** [January 18, 2023, 12:27am UTC](https://discussion.mainstreetbusinesspodcast.com/t/quot-the-hardest-thing-in-the-world-to-understand-is-the-income-tax-quot/97 "2023-01-18T00:27:38Z")\
**Posts on this page:** 1\
**Page:** 1

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**Author:** ![Leonard](https://avatars.discourse-cdn.com/v4/letter/l/a6a055/32.png) [@Leonard](https://discussion.mainstreetbusinesspodcast.com/u/Leonard)\
**Post date:** [January 18, 2023, 12:27am UTC](https://discussion.mainstreetbusinesspodcast.com/t/quot-the-hardest-thing-in-the-world-to-understand-is-the-income-tax-quot/97/1 "2023-01-18T00:27:38Z")

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I know you guys are working hard to help us understand this tax thing, but this quote definitely reflects how I feel often times​😰…

I recently consulted with a CPA for tax preparation purposes and was talking about losses in my Short Term Rental (put into service in 2022). The CPA brought to my attention that the losses I could use to offset my w-2 (assuming I qualify for “Material Participation”) are capped by the money I’ve put into the rental. He described this as the “At-Risk Rule” and said the figure (cap) is the total cost of upgrades and renovations, principle paid on mortgage (prior to being put into service - since it WAS my primary residence from 2018-22), down payment, and closing costs.

Can you guys talk about this?

Thank you!