If you are an investor buying and selling real estate than the passive loss rules will not apply to you. You will deduct the loss from the real estate as a capital loss on Sch D. If you held the investment for more than a year than the loss is long term capital loss.
If your capital losses exceed your capital gains, the amount of the excess loss that can be claimed against your other income is limited to $3,000, or $1,500 if you are married filing separately. If your net capital loss is more than this limit, you can carry the loss forward to later years.
Sec 469 (C)(7) applies to you if you are in real estate business. the term ''real property
trade or business'' means any real property development,redevelopment, construction, reconstruction, acquisition,conversion, rental, operation, management, leasing, or brokerage trade or business.
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.