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saudahmirza
Level 3

Passive Loss in a Qualified Joint Venture

My wife and I elect to be treated as a qualified joint venture. Among the activities in our joint venture is a real estate property with losses. Can these passive losses can be used to offset income in the joint venture? I only ask because ...

this mentions something about real estate -> https://www.thebalancesmb.com/what-is-a-qualified-joint-venture-398426

as does the IRS -> https://www.irs.gov/instructions/i1040se

However at the bottom of the IRS page it states:

Rental real estate income generally is not included in net earnings from self-employment subject to self-employment tax and generally is subject to passive loss limitation rules. Electing qualified joint venture status does not alter the application of the self-employment tax or the passive loss limitation rules.


Thanks!

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Accepted Solutions
DavidS127
Expert Alumni

Passive Loss in a Qualified Joint Venture

Passive losses can only offset passive income, until you dispose of the rental property.  The exception is the special $25,000 allowance.

 

This IRS Publication 925 website provides details about passive activity losses.

 

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1 Reply
DavidS127
Expert Alumni

Passive Loss in a Qualified Joint Venture

Passive losses can only offset passive income, until you dispose of the rental property.  The exception is the special $25,000 allowance.

 

This IRS Publication 925 website provides details about passive activity losses.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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