How do passive loss rules affect your cost
segregation study?
First let's define passive income. Passive
income is income from trade or business activities
where a taxpayer does not materially participate.
Rental real estate has been specifically identified
as passive, regardless of management position.
Therefore if the income of the investment
is passive, losses cannot be offset against
active income. Only when passive income is
present, can passive losses be applied.
In summary, no losses from passive income
may shelter active or portfolio income.
One exception is a real estate professional
defined by the IRS under section 469.
Does your real estate investment fall under
the active or passive category?
View our video titled "Do I qualify as a real
estate professional" to see if the exception
criteria is met for your real estate investment.
Call your CSS representative for a free estimate
of savings and consultative session.
