Combining Rentals for IRS Professional Standing

4 Replies

I understand from other discussions here on BP, that the IRS may have very stringent requirements for REI's claiming Professional Status to enable RE losses in excess of $25,000 per year against non passive income.

One suggestion, in addition to detailed records of the over 750 hours of RE activity, is the "Election" of combining of all your RE properties into a single entity.

I have not found a way to do this in Turbo Tax (no chuckles please).

Does anyone have experience with this and discuss the pros and cons of such an "election."

Cheers,

Buddy

Yes, there is a grouping election that can be made. I do not recommend doing this in TurboTax. You need a CPA who can provide you with professional advice on this. I may sound biased, but a good CPA is worth the investment.

Thanks @Lance Lvovsky. Not really saying I am going to use Turbo tax for my return. Just saying go thru a version of TT did not find any election for it. My Question is just to start a discussion on the pros and cons of such an election and the IRS requirements for the option of "Real Estate Professional". I have worked with one CPA and I am looking for another CPA with more knowledge in REI.

Cheers,

Buddy 

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Alvin Holmes One of the major cons is if you have passive losses carried forward from previous years. If grouped, you can't "activate" the passive loss until all properties are sold. This election needs to be considered carefully.