No Loss Limit for Real Estate Professionals and Spouses

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Real estate professionals can claim unlimited investment property losses against their AGI regardless of how much they or their spouse earns. People at high income brackets cannot claim losses on rental activities due to loss limitations, so many of them resort to becoming real estate professionals, allowing them to deduct unlimited losses on rental activities.

Real Estate Investors can qualify as “real estate professionals” if they spend at least 750 hours per year on their investment activities. A real estate sales license is not required and either spouse can qualify. Real estate brokers, realty sales agents, property managers, builders, contractors and leasing agents are all considered real estate professionals if they spent 750 hours on real estate business.

For example, say your AGI is $160,000, and as a result, you are not entitled to any property loss deductions because your AGI exceeds $150,000. However, if your spouse manages your real estate properties and spends more than 750 hours annually supervising the properties, making management decisions, inspecting properties, and supervising property sales and exchanges, then your spouse qualifies as a “real estate professional”. The result is that you and your spouse can claim unlimited property loss deductions from your properties because one of you qualifies as a “real estate professional.”

This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. No Loss Limit for Real Estate Professionals and Spouses is brought to you by SimplifyEm Pay Rent Online and Property Management Software

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