Author: Scott Zickefoose, CPA
Current economic conditions have forced many rental real estate owners to become accustomed to producing taxable losses. However, current tax laws are prohibiting many from realizing those losses in the current year. Per IRC §469(c)(2), rental real estate income is by default classified as passive income. Passive losses can only be used to offset passive income – not ordinary income or portfolio income. Rental real estate owners often find themselves unable to use the losses derived from their rental activities because they do not have passive income to offset the losses against.
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.