Can Real Estate Professionals wave net investment income tax?

Forum|Forum|6 years ago
March 22, 2020
3 replies
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TurboTax Online

Best answer by AmeliesUncle

Yes. If your rental activity rises to the level of a "Trade or Business" and you "Materially Participate" in that business, the Net Investment Tax does not apply.

Both of those requirements are pretty much part of being a Real Estate Professional.

ColeenD3

Level 15

No.

5. What individuals are not subject to the Net Investment Income Tax?

Nonresident Aliens (NRAs) are not subject to the Net Investment Income Tax. If an NRA is married to a U.S. citizen or resident and has made, or is planning to make, an election under section 6013(g) or 6013(h) to be treated as a resident alien for purposes of filing as Married Filing Jointly, the final regulations provide these couples special rules and a corresponding section 6013(g)/(h) election for the NIIT.

A dual-resident individual, within the meaning of regulation §301.7701(b)-7(a)(1), who determines that he or she is a resident of a foreign country for tax purposes pursuant to an income tax treaty between the United States and that foreign country and claims benefits of the treaty as a nonresident of the United States is considered a NRA for purposes of the NIIT.

A dual-status individual, who is a resident of the United States for part of the year and a NRA for the other part of the year, is subject to the NIIT only with respect to the portion of the year during which the individual is a United States resident. The threshold amount (described in # 3 above) is not reduced or prorated for a dual-status resident.

NIIT

AmeliesUncleAnswer

Level 15

Yes. If your rental activity rises to the level of a "Trade or Business" and you "Materially Participate" in that business, the Net Investment Tax does not apply.

Both of those requirements are pretty much part of being a Real Estate Professional.

Janel11118

Level 2

Yes you can provided you meet the participation rules in the following link.

https://www.irs.gov/publications/p925#en_US_2019_publink100030471

bow1point1

Level 2

How can these election be made on sale of business property for a real estate professional? I can not find how to manipulate the software to elect to wave the NIIT for the sale of my rental property, which as a real estate professional I am exempt from the NIIT on the gain of that business asset. And yes the properties info already shows I am a real estate professional, I materially participated, etc. Still no luck in removing the NIIT associated with it.

GeorgeM777

Level 11

One solution could be to try deleting Form 8960. Because it appears you are using TurboTax online, follow these steps to delete Form 8960.

Open or continue your return in TurboTax.
In the left menu, select Tax Tools and then Tools.
In the pop-up window Tool Center, choose Delete a form.
Select Delete next to the form/schedule/worksheet in the list and follow the instructions.