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ARTICLE · 14 FEBRUARY 2012

Relief For Real Estate Professionals

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The IRS issued Revenue Procedure 2011-34, which became effective on May 26, 2011 and allows a taxpayer to obtain an extension of time to make the rental real estate grouping election under Internal Revenue Code Section 469(c)(7)(A).

United StatesTax
Timothy Barry
Timothy Barry

The IRS issued Revenue Procedure 2011-34, which became effective on May 26, 2011 and allows a taxpayer to obtain an extension of time to make the rental real estate grouping election under Internal Revenue Code Section 469(c)(7)(A).  This election applies to taxpayers who meet the real estate professional rules under the Internal Revenue Code and helps these taxpayers avoid the passive activity rules with regard to their rental real estate activities. 

Normally, losses from a rental real estate activity are considered "passive" and can only be used to offset "passive" income from other activities.  If there is no passive activity income then the losses are currently disallowed and are carried forward to a future year.  However, if a taxpayer is considered a real estate professional, then losses from a rental real estate activity in which the taxpayer materially participates are not considered passive and may be currently deducted. 

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