@Mike9241 wrote:
- Passive loss rules do not apply to real estate professionals.
Passive loss rules do not apply to real estate professionals who materially participate in their rental real estate activities.
See https://www.irs.gov/publications/p527#en_US_2020_publink1000234059
If there is no material participation here, then @dermensch can carry the $12,000 in passive losses forward to future tax years (Form 8582).
