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In order to be able to offset your W-2 income, you need to meet two requirements in order to qualify for the tax benefits of being a real estate professional.
The Requirements are:
Please note that both requirements must be met in order to be designated as a real estate professional in the eyes of the IRS.
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The losses will offset your INCOME not the taxes you paid.
That's correct. You will receive a refund. There is no limitation on refund amounts.
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You uploaded the mortgage interest deduction page
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Unless you have some refundable credits, your refund is limited to the total of the payments you've made. In addition to federal withholding, payments can include a variety of other items including excess social security taxes. Please look at page 2 of your form 1040 for 2014 and compare the figures on lines 64 and 74. If line 74 is larger, the difference should show up on one or more of the lines from 65 to 73.
Also: becoming a "real estate professional" requires "material participation" as to each rental activity, unless you make an election pursuant to Section 469(c)(7) to treat all activities as one. Be prepared to demonstrate to the IRS how you meet the criteria for material participation as this is one of their high value targets for examination.
Let me know if you need more info; also let me know how your figures came out. Thanks.