Residential Rental / Passive loss use ?

[bbrownatl]

The client moved from Atlanta to Oregon in July. The ATL primary residence was converted to a rental in August and they began renting thereafter via a real estate management company in ATL. They are still very involved in selecting the tenant, etc. My thinking is that they would constitute material participation but the income and loss is passive. For 2007, they have a loss which per Form 8582 they are unable to use due to their other income. Am I missing something, they already owe the Feds a pretty significant amount. I'm just trying to figure a way to use that loss. Right now, I don't see a way but would appreciate any further insight.

Thanks.

[David1980]

Tell them to make some passive income and you can offset the passive income against the loss.



Okay, that doesn't help them in 2007. If it's MAGI on line 7 of the 8582 that's causing them to not qualify for the special allowance for rental real estate there's really nothing you can do.