Problem: real estate passive loss is not carrying against the Schedule C gains for a real estate professional. How do I override this. I picked materially participates and actively manages on the rental property.
Facts:
Realtor has a Schedule C with income. Realtor has a separate rental property with a loss.
Normally, if you are an active participant in your rental property, you can deduct as much as $25,000 in rental real estate losses, but this phases out at $150K. However, if you meet all the requirements as a real estate professional there is no income limit. How do I override the income limit/ and carry the loss against the schedule C income?
Realtor meets the requirements:
- Separate books and records are maintained to reflect income and expenses for this Enterprise.
- 250 or more hours of rental services were performed with respect to this Enterprise
- Contemporaneous records have been kept to document the rental services performed
- No property was used as a residence for any part of the year as defined in Section 280A(d)
- No property was rented or leased under a triple net lease
- No property was rented to a commonly controlled business as defined by Reg. 1.199A-4(b)(1)(i)
Therefore, the taxpayer qualifies as a real estate professional passive activity loss rules do not apply and losses from rental real estate activities should be deductible against other nonpassive income such as wages or Schedule C income.
Any advice.
