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Passive Loss Aggregation

cray1
2007-10-05 14:56

I understand i can make an election w/IRS to have my multiple rental properties treated as single entity to qualify for the 750 hr Material Participation requirement thus avoiding having to qualify on each property, which is often unattainable. the QUESTION - how do you make the election - is there a form?

JCRay - **Please See My Profile**

NewKidInTown3
2007-10-05 17:59

There is no form. It is a written election -- simply a signed statement written in your own words declaring that you elect to group all your rental real estate activities as a single activity. Once you file the election it is binding for future years.

I guess you are really trying to qualify as a real estate professional. If so, then please note that there are two requirements that have to be met.

  • More than 50 percent of your time must be spent in real estate activities, and,
  • More than 750 hours must be in real estate activities.
A real state professional must materially participate in each rental activity for losses to be deductible. Note material participation requires at least 500 hours. Even with the aggregation election, this is still pretty hard to achieve if you employ professional property managers.

If you have a full time job, then the 50% rule in the qualification requirements means that you have to spend more time in your real estate business than you are spending at your full time job. If your full time job is the typical 40 hour workweek (2080 hours per year), then to meet the 50% rule to qualify as a real estate professional, you will have to spend at least 2081 hours in your real estate business.


[ Edited by NewKidInTown3 on Date 10/05/2007 ]

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