About Course

This course addresses the passive activity loss rules under IRC Section 469 as they apply to rental real estate, and the real estate professional exception that allows a qualifying taxpayer to treat rental real estate losses as nonpassive. Rental real estate is presumptively passive regardless of the owner’s actual involvement, making this exception one of the most consequential, and most frequently misapplied, provisions available to real estate investors. Participants will examine the general passive activity loss framework and the material participation tests, the two specific requirements of the real estate professional exception, the separate material participation and aggregation election requirements that apply even after qualifying as a real estate professional, and practical substantiation and audit considerations.

Apply the passive activity loss rules under IRC Section 469 to rental real estate
Apply the material participation tests under Treasury Regulation Section 1.469-5T
Apply the two specific requirements of the real estate professional exception under IRC Section 469(c)(7)
Apply the separate material participation requirement and the aggregation election for real property interests
Identify the recordkeeping and substantiation standards relevant to a real estate professional status audit
Identify the interaction between real estate professional status and the Net Investment Income Tax

Course Content

Module 1 – Passive Activity Loss Rules Fundamentals
The passive activity loss framework under IRC Section 469; the material participation tests; the general rule presuming rental real estate is passive; the $25,000 special allowance for active participation.

Passive Activity Loss Rules Fundamentals

Module 2 – The Real Estate Professional Exception
The two statutory requirements under IRC Section 469(c)(7); the real property trade or business definition; why qualifying as a real estate professional does not by itself make rental losses nonpassive.

Module 3 – Material Participation and the Aggregation Election
The material participation tests applied to individual rental properties; the Treasury Regulation Section 1.469-9(g) aggregation election; the consequences of electing versus not electing to aggregate.

Module 4 – Real Estate Professional Status in Practice
Recordkeeping and substantiation standards; spousal qualification rules; the interaction with the Net Investment Income Tax; common IRS examination issues.

Final Assessment – Real Estate Professional Status and Passive Activity Loss Rules
Complete the following final examination. A passing score of 70% (7 out of 10) is required to receive CE credit.

About Course

Related Courses

What Will You Learn?

Course Content

Module 1 – Passive Activity Loss Rules Fundamentals The passive activity loss framework under IRC Section 469; the material participation tests; the general rule presuming rental real estate is passive; the $25,000 special allowance for active participation.

Passive Activity Loss Rules Fundamentals

Module 2 – The Real Estate Professional Exception The two statutory requirements under IRC Section 469(c)(7); the real property trade or business definition; why qualifying as a real estate professional does not by itself make rental losses nonpassive.

The Real Estate Professional Exception

Module 3 – Material Participation and the Aggregation Election The material participation tests applied to individual rental properties; the Treasury Regulation Section 1.469-9(g) aggregation election; the consequences of electing versus not electing to aggregate.

Material Participation and the Aggregation Election

Module 4 – Real Estate Professional Status in Practice Recordkeeping and substantiation standards; spousal qualification rules; the interaction with the Net Investment Income Tax; common IRS examination issues.

Real Estate Professional Status in Practice

Final Assessment – Real Estate Professional Status and Passive Activity Loss Rules Complete the following final examination. A passing score of 70% (7 out of 10) is required to receive CE credit.

Real Estate Professional Status and Passive Activity Loss Rules

Module 1 – Passive Activity Loss Rules Fundamentals
The passive activity loss framework under IRC Section 469; the material participation tests; the general rule presuming rental real estate is passive; the $25,000 special allowance for active participation.

Module 2 – The Real Estate Professional Exception
The two statutory requirements under IRC Section 469(c)(7); the real property trade or business definition; why qualifying as a real estate professional does not by itself make rental losses nonpassive.

Module 3 – Material Participation and the Aggregation Election
The material participation tests applied to individual rental properties; the Treasury Regulation Section 1.469-9(g) aggregation election; the consequences of electing versus not electing to aggregate.

Module 4 – Real Estate Professional Status in Practice
Recordkeeping and substantiation standards; spousal qualification rules; the interaction with the Net Investment Income Tax; common IRS examination issues.

Final Assessment – Real Estate Professional Status and Passive Activity Loss Rules
Complete the following final examination. A passing score of 70% (7 out of 10) is required to receive CE credit.