topic Why are my short term rental losses not being deducted from my wage income? in Investors & landlords

Why are my short term rental losses not being deducted from my wage income?

chmd06l — Mon, 23 Feb 2026 13:01:42 GMT

I actively participate in the business.
My average rental is less than 7 nights.
The loss is not being subtracted from my normal W2 income to reduce taxable income.

Re: Why are my short term rental losses not being deducted from my wage income?

Anonymous_ — Wed, 08 Feb 2023 19:35:04 GMT

The loss is still a passive loss unless you are a real estate professional who materially participates in the rental reporting on Schedule E or report on Schedule C as a real estate dealer or as an owner who provides substantial services to renters.

Re: Why are my short term rental losses not being deducted from my wage income?

HopeS — Wed, 08 Feb 2023 19:33:14 GMT

Even if you materially participate in the rental of your property this does not make the rental activity " active'. Therefore, you will be subjected to the passive loss rules.

For the rental activity to be active the owner has to be classified as a real estate professional. To qualify as a real estate professional, a taxpayer must satisfy the following tests:

Perform more than 50% of services in real property trades or businesses (“50% test”), and.
Perform more than 750 hours of service in real property trades or businesses (“750 hours test”).

Additionally, rental real estate loss allowance can be used to offset both passive and non-passive income. However, the deductible losses are phased out if you have an adjusted income of between $100,000 and $150,000.

See additional information below:

Real Estate Professional

@chmd06l