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bonairerob
New Member

Passive income from rental properties

I am retired and have a rental property. The rule on passive loss says I must work 50% of work time to be a property manager. If this is my only work , would I then be considered a property manager and able to deduct up to $25000 a year?
2 Replies
re2boys
Level 9

Passive income from rental properties

Be careful not to confuse the rules regarding a real estate professional (outlined by @SweetieJean)  and the Exception for Certain Rental Real Estate Activities passive loss rules.  If you meet the latter criteria, you can deduct up to $25,000 in losses each year.  Essentially, you must actively participate in your rental activities, have an AGI under $100K ($50K if MFS), and some other conditions as described in Schedule E instructions, page E-3,4.

https://www.irs.gov/pub/irs-pdf/i1040se.pdf

SweetieJean
Level 15

Passive income from rental properties

  • To qualify as a real estate professional, the taxpayer must spend:
    1. more than 50 percent of his/her time in real estate activities; AND,
    2. more than 750 hours in real estate activities.
  • A real estate professional must materially participate in each rental activity for the loss to be deductible

https://www.irs.gov/businesses/small-businesses-self-employed/passive-activity-loss-atg-chapter-2-re...

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