Tax time - schedule C realtor with no income

[Mike M.]

Hi all,

I got my real estate license to facilitate personal transactions, but haven’t derived any income from it for the past two years. I have a full time w2 job in Commercial Real Estate but have my real estate license on the side. Can I continue showing a loss every year on my schedule C? I.e I have been deducting my licenses, fees, association dues etc to the tune of 2k a year  

[Linda Weygant]

Without significant effort employed in this "business", you run afoul of hobby loss reporting rules.  In prior years, you would test your business to determine if you were actually running (a very unsuccessful) business or if you were simply dabbling in a hobby.

This article is a pretty decent break down of how that test is done using the facts and circumstances present in your endeavor

If running an unsuccessful business, your losses might be deductible, buy depending on the nature of those experiences, they might just be Start Up Expenses, which are handled much differently (and also not entirely deductible)

If you are just dabbling in a hobby, then prior to 2018, there were special rules about writing off those expenses, but in 2018 most of the ability to write off Hobby Expenses are now gone.