Will Changes to the Passive Income Rules Renew Interest in Real Estate?
Francine J. Lipman
University of Nevada, Las Vegas - William S. Boyd School of Law
James E. Williamson
San Diego State University - College of Business Administration
Journal of Property Management, Vol. 61, No. 78, May 1996
The final regulations under IRC Sec. 469(c)(7) provide guidance on the rental real estate activities of taxpayers engaged in real property trades or business as defined by the Omnibus Budget Reconciliation Bill of 1993. The final regulations do not provide an explicit definition of the phrase "trade or business," but rather state that a taxpayer's real property trades or businesses can be identified using any reasonable method. Because of such ambiguity, rental real estate may become an attractive tax shelter for some investors. The lack of a specific definition of a trade of business may give an opportunity for those in fringe real estate businesses to become real estate operators. Some taxpayers may also be able to characterize their real estate rental losses as non-passive.
Number of Pages in PDF File: 2
Keywords: rental real estate, tax shelter, real estate professionals
JEL Classification: H20, H25, H26, H24, K34
Date posted: June 16, 2008