Do you own rental property? You may be able to avoid having your rental real estate treated as a passive activity — and the negative tax consequences that can come with that treatment — by qualifying as a real estate professional for tax purposes. To qualify, you generally must spend more than 750 hours during the tax year in qualifying real property trades or businesses, and more than half of your total working time must be in those activities. If you qualify and you “materially participate” in a rental activity, losses from that activity are generally treated as nonpassive and may be deductible in the current year against nonpassive income. If you have questions, we’re here to help.
