topic In rental section, Am I at risk losses if I have a mortgage? in Investors & landlords

In rental section, Am I at risk losses if I have a mortgage?

kkurni — Mon, 08 Mar 2021 06:19:19 GMT

In rental section, Am I at risk losses if I have a mortgage?

I have rental losses, Should this be consider as "At risk" losses, if I have the mortgage?

Re: In rental section, Am I at risk losses if I have a mortgage?

ColeenD3 — Mon, 08 Mar 2021 15:10:31 GMT

Please see this answer from VolvoGirl:

If you don't know what it means then probably All your Investment is at Risk. It means you are using your own money for the business.

Check Box Not at Risk, if you have amounts invested in this business for which you are not at risk, such as the following:

Non-recourse loans used to finance the business
Cash, property or borrowed amounts used in the business that are protected against loss by a guarantee, stop-loss agreement, or other similar arrangement (excluding casualty insurance and insurance against tort liability).
Amounts borrowed for use in the business from a person who has an interest in the business, other than as a creditor.

Re: In rental section, Am I at risk losses if I have a mortgage?

Carl — Mon, 08 Mar 2021 15:32:04 GMT

In most cases, you do not have at risk losses because you have property insurance. But that's not the only thing that matters. IRS Publication 925 at https://www.irs.gov/pub/irs-dft/p925--dft.pdf covers the passive losses and at-risk rules. It can get complex for some.

Re: In rental section, Am I at risk losses if I have a mortgage?

Anonymous_ — Mon, 08 Mar 2021 16:29:30 GMT

Whether or not you have casualty insurance or insurance protecting yourself against tort liability is irrelevant with respect to the at-risk rules.

Re: In rental section, Am I at risk losses if I have a mortgage?

kkurni — Mon, 08 Mar 2021 18:47:37 GMT

Sorry, I am getting confused with the first answer.

So if I have loss in my rental property, and I have mortgage and Landlord insurance,
Will this consider as At Risk losses?

Which one is better to claim this as AtRisk vs Non Risk losses?

does passive losses equal to At Risk losses?

Re: In rental section, Am I at risk losses if I have a mortgage?

Anonymous_ — Mon, 08 Mar 2021 18:50:50 GMT

Simply put, if you are personally liable on your mortgage, you are "at-risk" for the amount of the mortgage.