Turn rental real estate activity losses into tax benefits — But you must qualify as a “real estate professional”
Abstract: This article discusses the hypothetical case of “Pat,” who’s losing money on his rental properties. He would like to deduct his losses, but the passive activity loss rules are restrictive. However, if he falls under the IRS definition of a “real estate professional,” he can enjoy tax benefits by converting passive losses into nonpassive losses. The article discusses what constitutes “passive” activity and what it takes to qualify as a real estate professional.