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TAX2214 - Real Estate Tax: Taxation of Real Estate Professionals

‐ Jun 9, 2022 1:45pm

A special passive activity loss limitation rule allows so-called real estate professionals (REP) to apply the material participation tests to their rental real estate, potentially moving these rentals out of the per se passive activity designation. As evidenced by a few court cases on this topic each year, this complex provision is often misinterpreted. The new regulations under section 163(j), a TCJA provision that uses a term from section 469(c)(7), added new regulations to Reg. 1.469-9 that clarify the REP definition. This presentation explains the REP rule, traps for the unwary, the significance of recent regulations, and planning and due diligence considerations.

Learning Objectives:

  • Identify the benefit real estate professionals might obtain for their rental real estate activities.
  • Recognize how regulations issued in 2020 and 2021 clarify terms used at §469(c)(7).
  • Apply planning and due diligence considerations to the §469(c)(7) real estate professional rule.


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