W2 Job and Real Estate Tax Deductions

[Bob Lett]

Let's say you're a new investor with a W2 job. As you start buying property out of state (air travel needed), can you deduct the travel? The reason I ask is because I've heard that you need to have your primary income in the business of real estate, such that if your W2 is a full-time job making you the majority of your money, the real estate investing is not tax deductible. At what point can you start claiming tax write-offs for the real estate business? Do you need an LLC or or can you purchase as an individual with the same tax incentives?

[Ashish Acharya]

Originally posted by @Bob Lett:

Let's say you're a new investor with a W2 job. As you start buying property out of state (air travel needed), can you deduct the travel? The reason I ask is because I've heard that you need to have your primary income in the business of real estate, such that if your W2 is a full-time job making you the majority of your money, the real estate investing is not tax deductible. At what point can you start claiming tax write-offs for the real estate business? Do you need an LLC or or can you purchase as an individual with the same tax incentives?

You can always deduct the cost of real estate operations. The losses as a result of the deductions might be limited if you are above certain income level and if you are not a real estate professionals. 

I think reading about the passive activity loss and the real estate professionals will give you your answers.