The IRS Chief Counsel’s Office sets forth a clear and easier path to rental property deductions. Let’s start with the big picture and why you want to learn the IRS method.

Your rental property deductions face a basic rule: all your rental real estate activities are automatically passive activities unless you pass a test that makes you a “qualifying individual,” known in most tax publications as a “real estate professional.”

Once you reach qualifying individual (real estate professional) status, your rentals become business properties that escape the passive loss rules, and they become tax shelters when you materially participate in the properties.

That’s the big picture. Now, let’s see how the IRS’s clear and easier path to real estate professional status eliminates the muddle and leads to tax deductions. ... Log in to view full article.