Active Versus Passive Investors
August 28th, 2008 By Peter G. Miller
In general terms, an “active” investor can use real estate losses to offset income from other (non-real estate) sources.
There are two basic tests to determine if an individual is an “active” realty investor. Is 50 percent of your time devoted to real estate activities? Do you spend at least 750 hours a year working with investment real estate?
Note that there is a possible exception to the usual tests for individual taxpayers which allows the write-off of as much as $25,000 in real estate losses.
The rules in this matter are complex. Please see a tax professional for details.
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