Discussion:Rental Real Estate Loss
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Revision as of 21:59, 10 April 2008 WPCPA (Talk | contribs) (How can I take t) Next diff → |
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| She did ask if she should keep her almost dormant S Corp to pay her health insurance and 1099 herself for the amount. }} | She did ask if she should keep her almost dormant S Corp to pay her health insurance and 1099 herself for the amount. }} | ||
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| + | {{ForumReplyPost|UserID=WPCPA|Date=10 April 2008|Text=How can I take the full deduction of my real estate loss? | ||
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| + | That, in my view, is the intent of IRC Sec 469 to give "reverse recognition of revenue" to passive activities - to accumulate all the losses (suspend the losses) - at disposition calculate the outcome. | ||
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| + | The legislative intent - to take back defered deductions, i.e. have it work in reverse.}} | ||
Revision as of 21:59, 10 April 2008
Discussion Forum Index --> Advanced Tax Questions --> Rental Real Estate Loss
Discussion Forum Index --> Tax Questions --> Rental Real Estate Loss
| 21 February 2008 | |
| Hi,
How can I take the full deduction of my real estate loss? Client has 2 rental propeerties with a total loss of $58,000. They are a RE Pro | |
Death&Taxes (talk|edits) said: | 21 February 2008 |
| Find the spot in your software to check that the person is a real estate professional and all should follow. | |
Scottycoyote (talk|edits) said: | 22 February 2008 |
| bingo | |
| 22 February 2008 | |
| I did that but I am coming up with a neg AGI.
Each property and his primary residence is in a SMLLC. Then he also has w-2 income, 1099 income and 2 seperate k-1s | |
Scottycoyote (talk|edits) said: | 22 February 2008 |
| negative agi? you mean a net operating loss then? so whats the problem, if you have neg agi then youre getting to use all your loss and then some.......now you just have to deal with the carryback/carryforward. | |
RoyDaleOne (talk|edits) said: | 22 February 2008 |
| He is renting to himself? | |
| 22 February 2008 | |
| no. He lives in his own house which is titled to his SMLLC for asset protection. The he has another SMLLC that holds his rental property. However, for the 2 SMLLC, the "owner" of them is a partnership LLC which he and his partner are the 2 members. That partnership's only "business" is the rental property. | |
Scottycoyote (talk|edits) said: | 23 February 2008 |
| does he actually meet the definition of a real estate professional? I imagine whats happening is the 1065 rental property is being prepared on the 8825, which then puts the income/loss on line 2 of the k1, which flows thru so there is no se tax. Is there a reason he wants to be considered a re pro? I guess if he meets the def you could just let the income flow thru, and go in to your se screen and make the income subject to se tax | |
| 24 February 2008 | |
| The problem I would point out to your client is this: While having his principal residence titled to the LLC for asset protection the single member LLC status would be questioned. he would then lose his 250,000 gain exclusion if he sells it because it doesn't pass the ownership test. By definition a SMLLC is a sole proprietor for tax purposes but it sounds like it is owned by partners. | |
| 24 February 2008 | |
| He would also need to satisfy the material participation standard for each property. | |
| 24 February 2008 | |
| the reason he wants to be a RE pro is there would be no limit on the RE losses he could take against ordinary,investment income. I would also question if he passes the test to be a RE pro with just one rental property. Otherwise he can take up to 25,000 of the passive RE loss if his income is low enough. | |
Death&Taxes (talk|edits) said: | 24 February 2008 |
| Wanting to be a real estate pro and being one are two different things, especially when the activity is strictly rentals. Own one or two properties and it is hard to imagine someone spending that much of their life on them, especially if they have a job. Have too many, say 12-15, and it is hard to meet the material participation standard for each, as Riley notes. So while he might qualify in the whole, he can only do so by aggregating all the properties, so that any past passive losses can be trapped until each individual property is sold.
My belief is that the term 'real estate pro' is thrown around too loosely on this board, not by the regular posters but by those who may or may not understand what it really means. | |
| 24 February 2008 | |
| DT, isn't it kinda like being a 'tax pro'? just have to buy Turtle Tax and it asks all the questions and makes you a pro? | |
Death&Taxes (talk|edits) said: | 24 February 2008 |
| Funny but an old client does her return on Turtle Tax every year, emailing me a question or two. This year they bought a rental property. Oh the questions the software asked! Fair market rental? 'What did they mean by that?' I was going to tell her to post as a real estate pro but I was sure when she asked 'What's a HUD-1?' the kitten lovers would be out in force.
She did ask if she should keep her almost dormant S Corp to pay her health insurance and 1099 herself for the amount. | |
| 10 April 2008 | |
| How can I take the full deduction of my real estate loss?
That, in my view, is the intent of IRC Sec 469 to give "reverse recognition of revenue" to passive activities - to accumulate all the losses (suspend the losses) - at disposition calculate the outcome. The legislative intent - to take back defered deductions, i.e. have it work in reverse. | |
