Tax Tip #195

Ralph Loggia • May 14, 2024

Claiming Rental Losses

What is Donald Trump known for? Ok, that is a loaded question. From a tax standpoint, he is known as a real estate professional. Why? The IRS allows rental losses for real estate professionals. Otherwise, those losses most likely provide no immediate tax benefit. An exception is for a taxpayer who actively participates in the rental property and has Adjusted Gross Income (AGI) of less than $150,000. In such cases, a loss of up to $25,000 could then be deductible.


Want to be aggressive only to (most likely) lose if audited by the IRS? Just have AGI of over $150,000 and claim real estate professional status — which states that the taxpayer is spending more than 750 hours each year materially participating in the rental property — when that is not the case (there are other tests besides the number of hours). When the IRS sends that audit notice that is then sent to Goldstein & Loggia to deal with…well, this is where the fun begins.

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