Real Estate Professionals

Maximize the tax benefits available to real estate professionals with this comprehensive guide. Understand how to qualify as a real estate professional and the implications for passive activity loss limits. This guide provides insights into the criteria for material participation, the election to aggregate rental activities, and special allowances for rental real estate losses, making it essential for anyone actively involved in real estate trades or businesses.

Highlights:

• Qualification Criteria: Must spend more than 750 hours and over half of your working time in real property trades or businesses.

• Material Participation: Key tests for material participation, including significant involvement and aggregation of rental activities.

• Passive Activity Loss Limits: Exceptions for real estate professionals, allowing for the deduction of rental losses in the year incurred.

• Special $25,000 Loss Allowance: Available to active participants in rental real estate, subject to income phaseouts.

• Election for Aggregation: Option to treat all rental properties as a single activity for meeting participation requirements.