Level 2

Rental real estate loss as nonpassive?

Forum|Forum|5 years ago
March 22, 2021
1 reply
13 views

I have a new client whose previous accountant (a prestigious top 100 firm) wrote off $70K in rental real estate losses flowing through from a partnership return. Taxpayers are not real estate professionals by trade; decided to invest in real estate via an LLC (1065). My understanding is rental real estate is always considered passive unless you are a real estate professional. Are there any other scenarios where this massive write off of rental real estate loss makes sense? Am I missing something? thanks in advance.

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sjrcpa

Level 15

Partnership return was final?

Another $70K of passive income from something else?

The more I know the more I don’t know.

A

annmariepAuthor

Level 2

hi...no, not a final return in 2019. I am preparing the 2020 1065 this year. No other nonpassive losses either. Thanks for brainstorming with me! 🙂

rbynaker

Level 13

This is not my usual wheelhouse . . . was the Partnership reporting separate activities (on the 1065 K-1s as supplemental information)? If we're just brainstorming, maybe one partnerships owns 4 properties and reports them all as separate activities to the partners. Last year, if one of the activities was disposed of in a fully taxable transaction, wouldn't that release the suspended passive losses related to that one activity?

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