This is a return I'll be getting more into later tonight or tomorrow, but I'm thinking from the top of my head that real estate professionals can have a rental loss and regular people can't show a loss on the 1040. I have a husband and wife, she's a liscensed real estate agent and obviously actively manages her property because she has meticulous records. The husband also has a rental house, is not liscensed and was clear that it's HIS rental. I'm wondering can he show a loss since she's liscenced and their married? Do I need seperate Sched E's or show 1 property passive and the others non-passive on the same form? Thanks for all of the advice, don't research too much, I'll do that, just off the top of your heads and that'll lead me in my research later. Thanks again, 5 more days counting today!
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Is the loss not showing because AGI is too high? There are some discussions you can find on the board about this topic that cover most of the details.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de Tocqueville -
A real estate license does not automatically make a real estate professional for passive loss qualifications. See IRS rules for these.Comment
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License has nothing to do with being a Real Estate Professional. One main requirement is 750 hours of active participation in each rental activity involved.Comment
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Thanks So Much Everyone!!
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OK if I'm reading right, it seems that as long as her participation is over 100 hours, active, continuos and more than anyone else, I can group all of the rentals into one activity to meet that test??? Do I still seperate them on the E??Comment
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Oh, and the wife is not liscensed as I thought, but losses were shown in the past for her on past returns. A form 8582 was also filed. Does that sound right?Comment
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Their is no property managers, they leased, dealt with people, took care of repairs etc. Therefore, they materially participated right?Comment
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The former passive losses were fine as long as they were eligible to take them -- i.e, AGI not over $150,000 generally, loss is limited to $25K per yr. You need to work it out on 8582. If their income or the loss exceeded the allowable amounts, then losses would have been limited or suspended.Last edited by Burke; 04-14-2011, 05:59 PM.Comment
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You should do separate entries on Sche E as depreciation would be calculated separately on each one, unless it was an apt bldg.Originally posted by Super Mom View PostComment
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That is a definition of material participation, yes.Originally posted by Super Mom View PostComment
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Please note that the "normal" definition for material participation DOES NOT apply to Real Estate Professionals. See below.
from the IRS webpage: http://www.irs.gov/businesses/small/...146326,00.html
Real Estate Professional In A Nutshell
Beginning in 1994, a real estate professional may treat rental real estate activities as non-passive if the taxpayer materially participates in the rental activities.[2] The material participation requirement applies separately to each rental activity (unless the taxpayer made a timely election to group all his rentals as a single activity). These rules apply to individual taxpayers and closely held C Corporations. See checksheet and interview questions at end of chapter.
Issues
To qualify as a real estate professional, the taxpayer must spend:
more than 50 percent of his/her time in real estate activities; AND,
more than 750 hours in real estate activities.
A real estate professional must materially participate in each rental activity for the loss to be deductible.[3]
Exception: A real estate professional may file a written election to group all rental real estate activities as one activity. As a practical matter, most elections were filed in 1995. However, the taxpayer may file the election in any year, and it will bind future years from that point.[4]Comment
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