W2 Employee (not REP)

[Ryan Kinoshita]

General question. Novice investor here. I currently work full-time as a W2 employee (pharmacist). I purchased 3 SFR (turnkey) last year to try to establish a rental portfolio. Property Management in place. Very passive investments. My CPA informed me that my expenses/losses on the 3 properties can't be written off against my active income but will be tabled for potential write-offs in future years. A big reason why I wanted to get into real estate was for the tax write-offs year to year. Any way around that so it can be utilized immediately? Unfortunately, I'm not a REP and don't manage a STR.

[Ben Trageser]

You need to materially participate in the short-term rentals. Based on it being passive, this is probably why he is stating you can't and the income is considered passive.

If you can prove you materially participated, then you could potentially offset W-2 income. This on top of completing cost segregation studies could potentially wipe out a large amount of your income.