You can materially participate without being a real estate professional, and vice versa. The tests are different. Most landlords are active participants, but not material participants. How much you can deduct is based on how much you're involved with managing your properties.
• If you are materially participating in managing your property, you may be able to deduct all of your losses, however...
• The amount you can deduct can be limited based on your level of involvement with each property
Active Participation Rules - Most landlords; passive activity rules apply
Material Participation Rules - The main thing with material participants is that the rental activity is considered a business, so the passive activity rules do not apply.
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