Election Day is April 18! [Tax elections we mean]

April 18 is Election Day in the income tax universe.  And for BP Members there is a lot to choose from.   

Here's one.  And I'll try to keep it short.  Just to tease your interest. 

(Ahhh, before I start.  Here's a BIG TIP for all of you.  Start keeping a daily log of what you do.  Where you drive to, what you do with respect to taking care of your properties.  It's only 2 1/2 months into the new year, and you should be able to "gundeck" Jan 1 until now.  You'll need this for Material Participation and to deduct your auto mileage. Do it daily.  Don't try to recreate in February next year. Take images of anything to document what you're up to.  File. OK?)

Now, what's the Big Election?  Who want to be a Qualifying Real Estate Professional? [Someone ought to make cute lapel devices . . .].  Technically this is an election under IRC §469*(c)(7)(A).

Why?  You have several rental properties.  You have to prove that you spent at least 750 hours each year tending to them.  Well, that's hard to do.  One property may consume all your time.  What if you could group them together, and then prove 750 hours for the group?  That's why.

Cons - let me give you the Cons first.   If you have prior year suspended losses (as many of you do), those prior year losses are not freed up going forward.  And, more pain, when you do sell a property with prior year suspended losses, well those losses cannot be applied to other properties in the new group.  It's rough.  Need to run the numbers.

Pros - oh yeah.  The Pros are just what you'd expect.  Losses from the year this election is made [2021], which would have been suspended by the passive activity rules, are now deductible as expenses of a qualifying real estate professional for all the activities that are part of the grouping election.

When? By April 18, 2022, or the extended due date of October 15.  The value of the extension is that you have some time to think about this, and are not under the gun of April 18.  

[You can also file a late aggregation election under certain circumstances.]

It's a big decision.  And needs to be scoped out.  If you want to keep your suspended losses from prior years, fine. You can make the election for future years for newer properties.  Stuff like that.