Tax Lawyer Blog

Qualifying as a real estate professional can be the difference between being able to deduct losses from your real estate activities and having passive activity losses that you cannot deduct. For a Florida stockbroker with real estate losses of $307,933 in 2010, qualifying as a real estate professional was definitely...

In our last post, we explained how an architect proved to the Tax Court that he qualified as a real estate professional, and was subsequently permitted to deduct passive activity losses from his real estate activities. Here, we focus on the attempt of another person to do the same --...

Investors are limited in their ability to offset income with passive losses, and even real estate investors who “actively participate” in their rentals (through management, capital improvements, selection of tenants, negotiation of leases, etc.) have a maximum $25,000 offset. However, 26 U.S. Code § 469(c)(7) provides special rules for real...

The new tax law ( 2017 TCJA) is great news for the commercial real estate industry.  Owners of pass-through entities may deduct up to 20 percent of their business income on their tax return, subject to certain limits, and increased deductions for capital expenditures will shield income for property owners...

Other Posts in this Series Part I: The Personal Mortgage Interest Deduction Part II: Acquisition Indebtedness and Home Equity Indebtedness (Voss vs. Commissioner in the Tax Court) In Part II, we provided the backdrop to the Voss vs. Commissioner case, and the Tax Court's reasoning why the mortgage interest limitations...

Other Posts in this Series Part I: The Personal Mortgage Interest Deduction Part III: Acquisition Indebtedness and Home Equity Indebtedness (Voss vs. Commissioner in the Ninth Circuit) In Part I, we described the requirements for a mortgage interest deduction under IRC 163(h)(3).  We noted that only the first $1.1 million...

Other Posts in this Series Part II: Acquisition Indebtedness and Home Equity Indebtedness (Voss vs. Commissioner in the Tax Court) Part III: Acquisition Indebtedness and Home Equity Indebtedness (Voss vs. Commissioner in the Ninth Circuit) The ability to deduct the interest on a mortgage is one of the most commonly...

In Part I, we discussed the special rules regarding real estate investment losses for real estate professionals. We noted that unlimited deductions for real estate losses may be taken only if specific requirements are met. The first requirement is that the taxpayer is engaged as a real estate professional (meaning,...

For the past 8 years, the IRS has been cracking down on investors who attempt to use their passive real estate investment losses to offset other income. IRC 467 limits an investor's ability to use passive losses to offset their ordinary or earned income. As a general rule, passive losses...