Real Estate Professional Status and Loss from Syndication-Passive

[THU NGUYEN]

Hi All,

I am claiming RE professional in 2019.  I'm active in managing all my rentals, my flips etc...However, I have a passive loss from a K1 issued by the syndication deal where I am set up a limited partnership.  Can I take offset this passive loss against my other active income generated from W2, flips, rental, private lending ect?

Appreciate if anybody knows and can share/advise?

Thu 

[Account Closed]

Generally no, but there are certain circumstances where it could be yes based the level of participation in the LP, on whether you are electing to group all your real estate activities and the % of gross rents from the LP compared to your overall R/E business.  

https://www.law.cornell.edu/cf...

"(f) Limited partnership interests in rental real estate activities -

(1) In general. If a taxpayer elects under paragraph (g) of this section to treat all interests in rental real estate as a single rental real estate activity, and at least one interest in rental real estate is held by the taxpayer as a limited partnership interest (within the meaning of § 1.469-5T(e)(3)), the combined rental real estate activity will be treated as a limited partnership interest of the taxpayer for purposes of determining material participation. Accordingly, the taxpayer will not be treated under this section as materially participating in the combined rental real estate activity unless the taxpayer materially participates in the activity under the tests listed in § 1.469-5T(e)(2) (dealing with the tests for determining the material participation of a limited partner).

(2) De minimis exception. If a qualifying taxpayer elects under paragraph (g) of this section to treat all interests in rental real estate as a single rental real estate activity, and the taxpayer's share of gross rental income from all of the taxpayer's limited partnership interests in rental real estate is less than ten percent of the taxpayer's share of gross rental income from all of the taxpayer's interests in rental real estate for the taxable year, paragraph (f)(1) of this section does not apply. Thus the taxpayer may determine material participation under any of the tests listed in § 1.469-5T(a) that apply to rental real estate activities."