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On my 2007 taxes I was told by my accountant that my

rental/real estate losses could not...
On my 2007 taxes I was told by my accountant that my rental/real estate losses could not be used because our husband/wife income exceeded $150,000. I have done some researching and came across some info about claiming passive loss. This info tells me that if you are in real estate full time or worked at least half the year, you are still able to deduct these losses. This info refers to section 2064 of the US Tax Code. I was wondering if this is still in effect, or if there is something different that would help.
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Answered in 9 minutes by:
5/2/2008
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Do you or your wife qualify as real estate professionals-

Under IRC § 469(c)(7) & Reg. 1.469-9, if the taxpayer spends the majority of his time in real property businesses, meeting the 1/2 personal services and 750-hour tests, rental real estate losses are no longer per se passive. If the taxpayer materially participates in each rental real estate activity, losses are fully deductible. If not, even though the taxpayer is a real estate professional, losses are passive and deductible only up to $25,000 (if MAGI is less than $100,000).

 

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.

 

 

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Customer reply replied 9 years ago
Reply to RD's Post: My wife works 7 days a week in real estate, owning 2 different offices and that is all she does. So with your last answer does it mean that we would qualify for the losses if we had gross income of $168,000, being she is definitely involved in every rental real estate activity
Thanks Ed

Is she more than 5% owner?

Real property trade or business means real property development, construction, acquisition, conversion, rental operation, management, leasing or brokerage. Time spent as an employee in real property activities counts only if the taxpayer is more than a 5 percent owner.

If she qualifies as described above than she can claim the loss.

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.

 

 

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Customer reply replied 9 years ago
Reply to RD's Post: Yes she is 50% owner as am I, and we file our taxes jointly. I guess my final question is should I just print this info for my accountant or is there somewhere he can find it.
I do appreciate your answers and I will accept after after you reply back. I am not the kind of person that expects things for nothing.

When you say 50% owner- Is she 50% owner of the place where she performs her services as a real estate professional?

 

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Customer reply replied 9 years ago
Reply to RD's Post: Yes she is, along with our personal rental properties. I should tell you also that part of her earnings that put us over the $150,000 was profits from her real estate s corporation. Does that make a difference?

In that case you will be able to write off the loss from rental property since she may qualify as a real estate professional.

You may want to provide the information on IRC § 469(c)(7) & Reg. 1.469-9 to your accountant and ask him to review the situation in light of these regulations- link to which is provided below-

http://www.law.cornell.edu/uscode/search/display.html?terms=469&url=/uscode/html/uscode26/usc_sec_26_00000469----000-.html

 

http://edocket.access.gpo.gov/cfr_2007/aprqtr/26cfr1.469-9.htm

 

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.

 

RD
RD, Certified Public Accountant (CPA)
Category: Tax
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