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New IRS rule increase likelihood of deducting rental losses

December 8, 2016

You don’t have to sell real estate for a living to deduct your rental losses.

But to deduct your rental losses against your business and investment income, you need to become a tax code “qualified person” often called in tax law a “real estate professional.”

You want qualified person status. With this status, your rental properties can qualify as tax shelters.

Best of all, the IRS provides an easy path to this qualified real estate professional status.

Want to find out how to take that path?

Read my new article titled Tax Tips: Alert: IRS Creates Clear Path to Rental Property Loss Deductions!

Three ways our fact-filled article can help you:

  1. We’ll explain a very important rule. Tax law treats renting real estate as a passive activity. Which means that in most cases you can’t use passive losses to offset taxable income from non-passive sources like business or investment income. But there’s a nice exception to the rule that lets you deduct rental real estate losses. All you have to do is become a qualified person sometimes known in tax law as a “real estate professional.” We’ll tell you how when you read the full article.
  2. We’ll let you know how Uncle Sam defines “real estate professional.” To qualify as a “real estate professional,” you have to meet two requirements. And they’re not all that daunting. You’ll learn exactly what they are when you read the full article.
  3. We’ll show you how to pass the “material participation” test and avoid misinterpretations of this rule. To deduct business losses against income from other sources, you have to “materially participate” in your rental-property business. This means passing one of five tests that we’ll explain fully when you read the full article.

Filed Under: Losses, Passive income and losses, Rental Properties, Tax Planning

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