@Roy Mitle Not quite—passive losses from your rental property cannot offset passive income from LP investments if the LP income is classified as portfolio income (e.g., interest or dividends from a fund). However, if the LP investment generates rental income, then passive losses from your rental can offset passive gains from the LP investment on Schedule E.

To find fully depreciated assets that generate passive income, look for stabilized real estate syndications or funds where depreciation has mostly phased out. Older properties with minimal depreciation deductions typically provide higher taxable passive income. However, most syndications structure deals to maximize tax benefits with cost segregation, meaning you’ll likely still see passive losses on K-1s.

If you’re looking to use passive losses efficiently, investing in an LP that distributes more cash flow than tax losses (like a mature rental fund) may be a good strategy. A real estate CPA can help structure your investments to ensure the best tax efficiency.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.