The best way to report this is to report your "grouped properties" as Schedule C self-employed income. Since you qualify as a real estate professional this year, you should file as a real estate business. You can use TurboTax Online Self-Employed or TurboTax Home & Business to do this.
Per Publication 527 from the IRS:
Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer. Providing substantial services. If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C.
- Advantage: Losses reported on a Schedule C are not limited by the Passive Activity Loss Rules.
- Disadvantage: Income on Schedule C is subject to Self Employment Taxes.
Schedule E:
If you file a Schedule E, you may be able to deduct up to $25,000 of losses from a Schedule E if you Actively Participate in the rentals. The IRS defines Active Participation as:
If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc., you normally report your rental income and expenses on Schedule E, Part I.
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