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Level 2
posted Oct 15, 2023 12:19:48 AM

Rental income classified as non passive so I don't get the $25,000 deduction

I have several  "passive" rental properties on my taxes with income.  Turbo Tax identified the income for only 2 properties as NPA non passive income and reduced my $25,000 deduction.  I checked my answers to make sure they were identified as passive with active participation.  What could be the reason for this?  The 2 properties are land.

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2 Replies
Level 15
Oct 15, 2023 1:13:04 AM

See if this thread explains it.   but classifying as non-passive with income means it won't affect the deductibility of losses from other passive rental activities. However, there is an Adjusted Gross Income limitation ($150K) for passive rental real estate losses with active participation (PRRELWAP) so review form 8582. go over the $150K AGI limit and you get no deduction for PRRELWAP   

 

The Tricky Business of Classifying Income from Land Rents on Your Tax Return | Cohen & Company (cohencpa.com)

Level 2
Oct 18, 2023 8:31:30 AM

Holy Tamole,

Yes the article is quite lengthy.  I need to digest it further.  Certainly answers the question!! Thanks!