Can Real Estate Professionals wave net investment income tax?

[ColeenD3]

No. 

5. What individuals are not subject to the Net Investment Income Tax?

Nonresident Aliens (NRAs) are not subject to the Net Investment Income Tax. If an NRA is married to a U.S. citizen or resident and has made, or is planning to make, an election under section 6013(g) or 6013(h) to be treated as a resident alien for purposes of filing as Married Filing Jointly, the final regulations provide these couples special rules and a corresponding section 6013(g)/(h) election for the NIIT. 

A dual-resident individual, within the meaning of regulation §301.7701(b)-7(a)(1), who determines that he or she is a resident of a foreign country for tax purposes pursuant to an income tax treaty between the United States and that foreign country and claims benefits of the treaty as a nonresident of the United States is considered a NRA for purposes of the NIIT.

A dual-status individual, who is a resident of the United States for part of the year and a NRA for the other part of the year, is subject to the NIIT only with respect to the portion of the year during which the individual is a United States resident. The threshold amount (described in # 3 above) is not reduced or prorated for a dual-status resident.

NIIT

[AmeliesUncle · Accepted solution]

Yes.  If your rental activity rises to the level of a "Trade or Business" and you "Materially Participate" in that business, the Net Investment Tax does not apply.

Both of those requirements are pretty much part of being a Real Estate Professional.

[Janel1118]

Yes you can provided you meet the participation rules in the following link.

https://www.irs.gov/publications/p925#en_US_2019_publink100030471

[bow1point1]

How can these election be made on sale of business property for a real estate professional? I can not find how to manipulate the software to elect to wave the NIIT for the sale of my rental property, which as a real estate professional I am exempt from the NIIT on the gain of that business asset. And yes the properties info already shows I am a real estate professional, I materially participated, etc. Still no luck in removing the NIIT associated with it. 

[GeorgeM777]

One solution could be to try deleting Form 8960.  Because it appears you are using TurboTax online, follow these steps to delete Form 8960.

1. Open or continue your return in TurboTax.
2. In the left menu, select Tax Tools and then Tools.
3. In the pop-up window Tool Center, choose Delete a form.
4. Select Delete next to the form/schedule/worksheet in the list and follow the instructions.

@bow1point1

[bow1point1]

Are you suggesting to temporarily remove form 8960, or remove it so no NIIT is calculated? Because that form must be included when I file due to some investment income tax being due, just not the portion associated with my rental real estate sale since I am a real estate professional. Afraid to delete the form and have the software not add it back in if it's necessary. 

If I could edit the form myself I would allocate on line 5b form 8960 the portion of the rental real estate that is not subject to NIIT, but obviously TurboTax does not allow that and everything must go through their question format. 

[Vanessa A]

If you are confident in your calculations for the allocation, you could use the desktop version of TurboTax which would allow you to manually allocate the portion of the rental income not subject to NIIT directly on the form using forms mode.  

If you have not yet purchased the online version, you can buy the download version and fix the form there.