Tax Reform and Rental Real Estate Deductions
Two scary words in tax reform are “fairness” and “simplification.”
In most cases, this combination raises your taxes and makes the law more complex. As you likely know, tax reform is in the air again, and it will bring its share of good and bad news. But for your rental real estate loss deductions, the good news is that the reform being considered does not alter the beneficial strategies here.
In general, rental properties are passive activities subject to the dreaded passive-loss rules. IRS regulations contain six non rental exceptions to the definition of rentals. In most cases, the non-rental exceptions are businesses for tax purposes.
To deduct losses of any of the six exceptions, you simply need to materially participate in the activity.
Want to know more? Have some tax questions of your own? Get in touch with us and we’ll guide you thru the tax and accounting process.