We have rental income from a Short Term rental, but have substaintal losses for the year. My spouse is a realtor so it should pass on as nonpassive losses. Losses do not seem to be flowing into the 1040 (should not have any limitations). Just shows $0 as income.

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GeorgeM777

Does TurboTax reflect that your spouse is a Real Estate Professional (assuming your spouse is a REP)? As a Real Estate Professional, the losses would not be passive losses. If the Real Estate Professional status does not apply, does your spouse meet the active participation rules. Generally, the active participation rules allow those in a real estate activity to offset up to $25,000 of rental losses each year against non-passive sources. There are limitations, of course, and the key to qualifying is the requirement to "actively participate" in the rental activity.

Here is the formula for determining whether, under the active participation rules, you can deduct some of your losses. If modified adjusted gross income (Modified AGI) is above $100,000, the $25,000 limit is reduced according to the formula (Modified AGI - $100,000) X 50% = AMOUNT REDUCED BY. For example, if Modified AGI is $130,000, the deduction would be REDUCED BY ($130,000 - $100,000) X 50% or $15,000. The deduction would then be $10,000 ($25,000 - $15,000). The benefit is lost entirely if Modified AGI reaches $150,000.

@jasonmburks

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jasonmburksAuthor

She is a real estate professional as a full time job, as well as manages all aspects of the STR (advertising, bookings, scheduling, working with contractors etc). I would think this would be nonpassive.