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I replied to you but don't think you got it for some reason. I don't have losses but I did read in several places that" for FAFSA, rental properties are normally considered investments, not businesses, unless they are part of a formally recognized business that provides additional services.." and this election (and it would meet the nexus test) would make the long term rental part of the property management and rental business and for all intents and purposes be treated as one activity, one non passive business. Why do you say it does not alter how the properties are treated for financial aid ? Also someone mentioned in passing there are cons to making this election - but didn't say what they were so what are the cons?
Do you know where a case has discussed this ? because I think that one can make a case that they are all considered under the same family rental business if aggregated and the irs agrees to it or doesn't oppose it. Also how would substantial gains from a passive property offset the losses of an active one? please explain this a little more( and right now I have never had losses knock on wood) also can't I ungroup them in another tax year if I wanted to?
I still don't understand what that all means. I thought passive is always bad when it comes to losses because it limits the amount. Not sure what you meant by gains or the treatment of it being balanced. Also I found this -
he small business exclusion was established by section 8019(c) of the Higher Education Reconciliation Act of 2005 (HERA 2005) as part of the Deficit Reduction Act of 2005 (P.L. 109-171, February 8, 2006). The specific amendment is as follows:
(c) TREATMENT OF FAMILY OWNERSHIP OF SMALL BUSINESSES. -- Section 480(f)(2) (20 U.S.C. 1087vv(f)(2)) is amended --in subparagraph (A), by striking "or";in subparagraph (B), by striking the period at the end and inserting "; or"; andby adding at the end the following new subparagraph:"(C) a small business with not more than 100 full-time or full-time equivalent employees (or any part of such a small business) that is owned and controlled by the family.".
"(C) a small business with not more than 100 full-time or full-time equivalent employees (or any part of such a small business) that is owned and controlled by the family.".
After this amendment is applied to section 480(f)(2) of the Higher Education Act of 1965, the legislative language becomes:
With respect to determinations of need under this title, other than for subpart 4 of part A, the term "assets" shall not include the net value of --the family's principal place of residence; ora family farm on which the family resides.a small business with not more than 100 full-time or full-time equivalent employees (or any part of such a small business) that is owned and controlled by the family.andIf the family owns multiple rental properties and materially participates in the management of the properties, they are more likely to be considered business assets.
If the family owns multiple rental properties and materially participates in the management of the properties, they are more likely to be considered business assets.
Ok that would be ok and yes that was quoted from a FAFSA article on a financial aid website. Also maybe I don't even have to get that election to consider having materially participated with other factors and still have the asset excluded as part of the family business.