At what point does a house become a passive investment after you buy it?

[okst1960]

If I buy a house and use it as a rental, how long do I have to have it as a rent house to consider it a passive investment?

[Mike9241]

from day 1 of rental. 

[okst1960]

What if you rent it for one month and decide to sell it?  Is it still considered passive income/loss?

[Carl]

Why does this matter to you? If you sell the house 1 day or 1 month after you buy it, nothing really changes on the tax front weather it's a rental or not. In general, it only comes into play if you classify the property as a rental for more than 1 year.

[okst1960]

If you have unrealized passive losses, can you not use those losses against the gain of the rental house?  If you're saying I have to own it as a rent house for more than one year before I'm unable to claim it as a passive loss, that's what I was asking and that's why it matters.

[pk]

@okst1960  having read through your posts and  answers by my colleagues @Mike9241 , @Carl  and agreeing with them, I am still unsure as to how you propose to liquidate unrealized losses .  You are proposing sell/ liquidate  your holdings  and thus incur and recognize the losses.   Then  within the same year you propose to buy a residential  ( thus incurring good chunk  outlay ),  actually rent the asset  or declare it available for rent and then after a respectable time lapse sell this  asset ( thus incurring  sales expenses ( real-estate commission etc. ) and transfer tax etc. and still find sufficient gain to offset your losses.  Unless you are living in a very hot market, this is impossible.

 Suggest you talk to an accountant on how best to reduce your unrealized loss ( if you really have to divest ).

 that is my opinion ( and others may disagree on my conservative look at the situation )

[okst1960]

I have several houses, that, over the years, I've been unable to take losses due to income limit.  I was just wondering if I could use these unrealized losses to offset a gain on a house.  I recently purchased it with the intent to rent it out but I have a buyer that wants to buy it at a substantial gain.  I'm not using a real estate agent.  It's a cash sale.  I didn't know how long I could own the house before selling it as a rent house.  I assumed it had to be owned and intended for rent for a certain period of time, otherwise, it would be a flip house, of which, I understand the gain would be taxed at short/long term capital gains tax.

[pk]

@okst1960 , thank you for the clarification.  I think I understand the situation and what you are trying to do.

You are correct in that if the holding period is less than a year , then the gain would be classed as ordinary gain and taxed  at your marginal rate.  It can still offset ( interact with your)   any  other short-term gain/loss,   Note , however, that the   interaction is between realized gain/ loss  ( not un-realized ones ).

Hope this make sense  to you .

Is there more I can do for you ?

pk