If you have rental real estate losses and earn more than $75,000 ($150,000 for joint returns) in other income (like W-2 or investments), you typically can't deduct those losses. However, if you're considered a Real Estate Professional, you can deduct real estate losses against other income.

What is a Real Estate Professional?

To qualify as a Real Estate Professional, you must meet two criteria:

1. More than 50% of your work must be in real estate activities.

2. You must spend at least 750 hours per year in real estate activities in which you materially participate.

Why It Matters

If you qualify as a Real Estate Professional, you can deduct rental real estate losses against other income, regardless of your income level. This can result in significant tax savings.

You can designate a company as a Rental Real Estate Business in the client portal.

1. Go to the Companies tab in the left-hand navigation and select the desired company.

2. Click on the Income and Expenses tab at the top.

3. In the Business Configuration section, check the box for Rental Real Estate Business.

4. Be sure to click Save after selecting the option.