Rental Activity

Key Information

A Rental Activity is any activity where gross income is derived principally from renting tangible property to customers.

Tax Impact

• Depending on your overall tax situation, rental activities may be classified as passive or non-passive activities. This classification can affect how rental losses are treated for tax purposes
• Special rules apply to real estate professionals who actively manage multiple rental properties, or owners of short term rental activities that can establish material participation. These rules can allow for greater deductions for losses from rental activities.

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References

IRS Topic No. 414, Rental Income and Expenses