Before the Tax Reform Act of 1986, you could deduct your rental property losses.
Today, to deduct your rental property losses against your other income, you must both
qualify as a tax law–defined real estate professional and
materially participate in the property or properties that caused the losses.
Tax law uses a number-of-hours test for both the real estate professional classification and the material participation requirement.
The drive time you spend on your rentals can help. Many rental property owners fail to include their drive time as rental property participation time.
Further, the IRS has a publication that says you can’t include drive time. But as you will see in this article, you have strong possibilities that your drive time counts as rental property participation time. ... Log in to view full article.