Every year I designate myself as a "real estate professional" (I meet all the criteria) for tax purposes.
I received a K-1 from a multifamily syndication that I am a limited partner. It shows a large loss on line 2 (net rental real estate income or loss) because of the huge depreciation amounts done legally with a cost segregation study.
I do not materially participate in this business, so I answer "No" when TurboTax asks me if I did.
As a result, I cannot offset my rental income from my other properties with this loss. So the loss accumulates on form 8582, to be used in future years.
My question is: Can I answer "Yes" to that question?
My thought process is: since I am a RE Professional, it doesn't matter if I actively participated or not.
Answering "Yes" results in substantial tax savings 🙂
