Real estate investor vs. professional: Why it matters
Income and losses from investment real estate or rental property are passive by definition — unless you’re a real estate professional. Why does this matter? Passive income may be subject to the 3.8% net investment income tax (NIIT), and passive losses generally are deductible only against passive income, with the excess being carried forward.
Real Estate Investing Podcast with Mark Patten and Mandy Thiebaud
Mark Patten, CPA and Mandy Thiebaud, CPA of McKinnon Patten & Associates discuss with Old Capital Podcast how earned income and passive income are treated by the IRS, capitalizing versus expensing replacements & repairs, and why owning real estate is more than just a return on your investment.