Why Aren't Rental Losses Netting with Gains?

Forum|Forum|3 years ago
December 30, 2022
3 replies
24 views

Husband and Wife filing jointly. Wife has K-1 from Skating business, Husband has K-1 from Skating Retail business, Both receive K-1 from joint business in two rental properties (neither are RE Professionals) and she has a Schedule E Vacation Rental. My question is, why aren't the passive losses from the K-1's on the two rental units (and carryforward rental losses) being netted with her Schedule E rental gain? The gain should wipe out the current rental losses and the carryforward losses. I use ProSeries Basic. It seems to me they should net out. Am I missing something? Thanks in Advance for assistance!

ProSeries Basic

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sjrcpa

Level 15

Does the Vacation Rental qualify as Passive?

The more I know the more I don’t know.

F

FireheadAuthor

Level 3

Hi

She materially participates, but isn't a real estate professional.

T

TaxGuyBill

Level 15

@Firehead wrote:

she has a Schedule E Vacation Rental.

Do they have personal use of the rental? If so, what are the number of personal days and the number of rental days?
Is this short-term rentals?
Do they "materially participate" in the rental?

F

FireheadAuthor

Level 3

Hi TaxGuyBill

They used the vacation rental no more than 14 days, the rentals are short term (Vrbo), and she materially participates in that she drives down most weekends to help clean for the next renter. Plus, she supervised all the redecorating, as well as the improvements to the building/lot.

BobKamman

Level 15

Shouldn't that go on Schedule C?

JRC

Level 7

Rental income/loss is Passive and will not offset active income.

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