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As Lisa said, you can't pick and choose to take it or not. It is required if you are "active" (most rentals owners are).
Tax Code Section 469(a) disallows passive losses. However, 469(i) says "subsection (a) shall not apply to that portion of the passive activity loss … which is attributable to all rental real estate activities with respect to which such individual actively participated in such taxable year” (then it limits the loss to $25,000).
https://www.law.cornell.edu/uscode/text/26/469#i
If you were "active", you are not allowed to say that you were not, just because you want to defer the losses. That would be tax fraud.
As Lisa said, you can't pick and choose to take it or not. It is required if you are "active" (most rentals owners are).
Tax Code Section 469(a) disallows passive losses. However, 469(i) says "subsection (a) shall not apply to that portion of the passive activity loss … which is attributable to all rental real estate activities with respect to which such individual actively participated in such taxable year” (then it limits the loss to $25,000).
https://www.law.cornell.edu/uscode/text/26/469#i
If you were "active", you are not allowed to say that you were not, just because you want to defer the losses. That would be tax fraud.
I cannot find where it specifically states that you are REQUIRED to take the "special allowance" for rental losses, but I believe you are looking for IRS Publication 925, Page 4: https://www.irs.gov/pub/irs-pdf/p925.pdf.
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