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Q: can I deduct rental loss if I actively participated in rental management?
A: In brief, if either of the following apply to you, the answer is no, you cannot deduct the rental loss. SEE BELOW:
Rentals generally are passive activities and are subject to the passive loss disallowance rules
. See IRC § 469(c)(2). A loss from a passive activity is not currently deductible unless one of the following applies:Passive income
exists (losses are allowed to the extent of passive income);
The taxpayer actively participates in a rental real estate activity and qualifies for the $25,000 special allowance;
There is a qualifying disposition under IRC § 469(g); or,
The taxpayer meets the requirements of IRC § 469(c)(7) for real estate professionals.
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