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chanwail
New Member

We file jointly. My W2 income >$150k. My wife manages (750 hours) our rental property that incurred rental loss. Are we eligible for the $25k rental loss tax deductible?

I believe we have active (not passive rental loss), since my wife is full time on our rental management and spent 750+ hours. However, I am unable to get TurboTax to deduct the $25k loss. Please advice

1 Reply
Coleen3
Intuit Alumni

We file jointly. My W2 income >$150k. My wife manages (750 hours) our rental property that incurred rental loss. Are we eligible for the $25k rental loss tax deductible?

Yes, if she meets both the qualifications. 

RE Professional Qualifications.   You qualified as a real estate professional for the year if you met both of the following requirements.

  • More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated.
  • You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated.

  Don’t count personal services you performed as an employee in real property trades or businesses unless you were a 5% owner of your employer. You were a 5% owner if you owned (or are considered to have owned) more than 5% of your employer's outstanding stock, outstanding voting stock, or capital or profits interest.

  If you file a joint return, don’t count your spouse's personal services to determine whether you met the preceding requirements. However, you can count your spouse's participation in an activity in determining if you materially participated.

Real property trades or businesses.   A real property trade or business is a trade or business that does any of the following with real property.

  • Develops or redevelops it.
  • Constructs or reconstructs it.
  • Acquires it.
  • Converts it.
  • Rents or leases it.
  • Operates or manages it.
  • Brokers it.

(See the attached screenshot below. Click to enlarge.)


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