topic TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income. in Self employed

TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

sharight3128 — Fri, 07 Feb 2020 00:02:36 GMT

My husband and I own 2 LLC's. One is a construction company and one is our rental property company. We have losses on our rental income and even though I answered all questions pertaining to material participation and meet all the requirements, TurboTax is not applying the loss to my income on my construction company. How do I fix this?

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

Anonymous_ — Fri, 07 Feb 2020 00:17:27 GMT

@sharight3128 wrote:

...TurboTax is not applying the loss to my income on my construction company. How do I fix this?

First, enter Forms Mode and review Schedule 1, Line 5 to determine the figure that is reported on that line.

Next, go through your Property Profile and ensure that you have indeed answered the material participation question because it is easy to miss and the default answer is "No".

On a test return, I could not reproduce the error you are experiencing so there is most likely an input issue.

Finally, I will refrain from addressing the LLC issue but, hopefully, you are aware that a multi-member LLC is typically required to file its own income tax return (Form 1065) unless it is owned by a married couple as community property in a community property state.

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

sharight3128 — Fri, 07 Feb 2020 02:19:23 GMT

I checked that line and the number shows a loss of around $10,000 which is not even close to what it should be. The LLC is managed by myself and my husband only. On the property profile I did answer the question for material participation as yes, but then it seems to ask another question about active participation which to me it shouldn't be asking as I already said I was a material participant. No matter how many more expenses I add to the rental side, my tax bill does not change.

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

Anonymous_ — Fri, 07 Feb 2020 02:36:25 GMT

@sharight3128 wrote:

The LLC is managed by myself and my husband only.

I understand but, as I already stated, unless you live in a community property state and hold your interests in the LLC as community property, you have a multi-member LLC (Form 1065 is required).

@sharight3128 wrote:

....but then it seems to ask another question about active participation which to me it shouldn't be asking as I already said I was a material participant.

Correct, but go ahead and answer in the affirmative to that question and any other related questions because clearly one (or more) of your responses is creating this issue.

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

sduser1 — Sun, 18 Apr 2021 15:36:42 GMT

we are in a similar situation and the question for material participation (yes/no) does not even pop up for me. The question for active participation does but looking for the material participation question.

Please help!

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

Anonymous_ — Sun, 18 Apr 2021 15:52:50 GMT

@sduser1 wrote:

.....The question for active participation does but looking for the material participation question.

If you do not indicate that you are a real estate professional (see screenshot) in the beginning of the rental property section, you will not see the screen with the material participation inquiry.

@sduser1

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

sduser1 — Sun, 18 Apr 2021 17:34:03 GMT

I tried it and it says I do not quality as a real estate professional. Not sure why.

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

Anonymous_ — Sun, 18 Apr 2021 17:36:55 GMT

@sduser1 wrote:

I tried it and it says I do not quality as a real estate professional. Not sure why.

It will not "say" you do not qualify if you check both of the first two boxes.

If you do not meet those criteria, then you are not a real estate professional.

Re: TurboTax is not allowing my rental property loss to be applied against other active income even though I meet the qualifications for a real estate professional and my rental property gain/loss is considered active income.

sduser1 — Sun, 18 Apr 2021 19:52:10 GMT

Thanks a ton!! That helped.