real estate professional exemption on passive loss deduction -25k on income over 150k

[itscalahan]

is the exemption available for a full time real estate agent with income above 150K and rental losses on 8 residential rentals? i am being audited on taking the exemption and being denied on the basic of not being a professional because of the reg is written on determinable definition. is there any experiences to be shared?

[TaxGuyBill]

If you don't qualify as a Real Estate Professional (as defined by the tax laws), or do not "Materially Participate" in the rental activity, you will not qualify to take any passive losses if your income is over $150,000.

There isn't really anything to do except pay the taxes that you owe, plus any penalties and interest they impose on you.

[mactoolsix]

Follow these IRS guidelines to see if you qualify

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Passive-Activity-Loss-ATG-Exhibit-2-5-Real-Estate-Professional-Interview-Half-Personal-Services-Test

[Burke]

Many make the mistake of assuming a Real Estate Agent is automatically a "Real Estate Professional." But they must meet the IRS guidelines for that designation under the Tax Code to be able to take the full deduction for losses. It is not automatic because they sell real estate as a career.