Investors & landlords
Check your entry in the Sch E input and make sure you categorized yourself as an active participant in the real estate activity.
Remember, only in such circumstances, would you be disallowed to take this loss.
Use the Search (upper right) > type rentals > click the Jump to... link > Review Property Profile
- Active participation
Also the activity in the rental would have to be passive activity.
In your case , you would not be allowed to be a real estate professional because you are materially participating.
There are two kinds of passive activities. Trade or business activities in which you don't materially participate during the year. Rental activities, even if you do materially participate in them, like in your case, unless you're a real estate professional, then it would be nonpassive. Because to qualify for the disallowance you would have to be materially participating, you would not be allowed to be a real estate professional
Business Income and Expenses
Rental Properties and Royalties
then hit next
and again next
You are considered to be a real estate professional (i.e., in a real property trade or business) if:
1) more than one-half of the personal services you provided during the year were performed in a real property trade or business in which you materially participated; AND
2) the number of hours in which you materially participated in this real property trade or business was more than 750 hours; AND
3) you must materially participate in each rental real estate activity unless you filed an election to group all rental real estate activities as one (and materially participate in that activity).
A "real property trade or business" means any real property development, redevelopment, construction, reconstruction, acquisition, conversion, or rental operation, management, leasing, or brokerage trade or business.
Personal services performed as an employee are not treated as being performed in a real property trade or business unless you are a more than 5% owner of the trade or business.
For joint return purposes, the eligibility requirements are considered met if either you or your spouse separately satisfy the requirements.
[EDIT 2/15/2023 11:00 AM PST]
