Does a full-time mortgage broker qualify as a real estate professional for purposes of the exemption from passive loss limitations on rental real estate.
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I'm a bit on a limb here
but I believe one of the heaviest factors in determing active participation here is having a real estate license, and I believe many states bar real estate agents from also being mortgage brokers - this is just my experience. I'm also sure that selling mortgages isn't lumped into the list of activites used to qualify for this treatment. The Tax Book does an excellent job of covering these topics on page 7-13 of the Deluxe edition."Congress has spoken to this issue through its audible silence."
Anyone ever notice they beat the daylights out of the definition of a child, but they don't spend much time at all defining "parent"? -
I would say no
Because he is not a real estate broker. I can't see how selling loans could qualify him as an RE Pro. What is he doing in the way of rental real estate?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 TocquevilleComment
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See Pub 527, page 15, for a full discussion of "real estate professionals," and what constitutes "real property trades or businesses." Brokering mortgages is not listed. It depends on how he conducts his rental property activities and other real estate activities.Originally posted by cfsadvsr View PostComment
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See Code Sec 469(c)(7)(C) Real property trade or business. For purposes of this paragraph , the term “real property trade or business” means any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business.
Mortgage broker is not a real estate activity, so your broker doesn't qualify, especially if he is full-time broker. He won't meet the material participation standards. TaxTools has a flowchart for this, plus there are lots of articles about this topic.Comment
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