Non-passive income designation

[scott c1]

In my federal return my rental income loss is treated as non-passive and offsets other income, as a real estate professional. However, in my CA return it's treated as passive and subjected to AGI limits with little impact on my AGI. Doesn't CA treat these losses as non-passive for real estate professionals?

[MindyB]

No, California doesn't conform to the federal real estate professional exception. 

See 2024 Instructions for Form FTB 3801: "Material Participation in Real Property Business – IRC Section 469(c)(7) Beginning in 1994, and for federal purposes only, rental real estate activities of taxpayers engaged in real property business are not automatically treated as passive activities. California did not conform to this provision. For California purposes, all rental activities are passive activities."