See if this thread explains it. but classifying as non-passive with income means it won't affect the deductibility of losses from other passive rental activities. However, there is an Adjusted Gross Income limitation ($150K) for passive rental real estate losses with active participation (PRRELWAP) so review form 8582. go over the $150K AGI limit and you get no deduction for PRRELWAP
The Tricky Business of Classifying Income from Land Rents on Your Tax Return | Cohen & Company (cohe...
