Even if you materially participate in the rental of your property this does not make the rental activity " active'. Therefore, you will be subjected to the passive loss rules.
For the rental activity to be active the owner has to be classified as a real estate professional. To qualify as a real estate professional, a taxpayer must satisfy the following tests:
- Perform more than 50% of services in real property trades or businesses (“50% test”), and.
- Perform more than 750 hours of service in real property trades or businesses (“750 hours test”).
Additionally, rental real estate loss allowance can be used to offset both passive and non-passive income. However, the deductible losses are phased out if you have an adjusted income of between $100,000 and $150,000.
See additional information below:
Real Estate Professional
@chmd06l
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