Can I deduct rental losses from income generated from selling goods online?

[curious_panda]

Hello,

This year my rental losses is much greater than income generated from my rental property. I can't deduct these losses from my personal income since I don't qualify for the Special 25,000 Allowance. I am also not an real estate agent.

I like to generate some passive income to avoid suspended losses at the end of the year. Does selling goods online counts as an passive activity? More specifically, I am considering doing dropshipping where I don't produce, store, or ship the products. 

Anyone have experiences in this area?

[Carl]

No. At least, not directly. Your income from selling online is reported on SCH C, whereas your rental income is reported on SCH E.
However, if you meet the requirements, you will be allowed to deduct a maximum of $25K in losses from the rental income, from the total of all of your other "ordinary" income. Depending on your numbers, it could be less, or none at all.

The TTX program will take care of that "for you" in the background, and not bother you with the details.

[Anonymous_ · Accepted solution]

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@curious_panda wrote:

I like to generate some passive income....

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Income from a passive activity (passive income), for federal income tax purposes is not the opposite of "ordinary", "active", or "earned" income; it is the opposite of nonpassive income. Passive income does not include income such as interest, dividends, capital gain, and the like.

In order to generate passive income, you would generally have to either own rental property that generates a net profit or conduct a business in which you do not materially participate. Selling goods online would typically involve material participation on your part.