Passive activity rules for rental real estate

This lesson is part of the full course.

In it you will learn to:

• Explain why rental activities are passive even with material participation, and identify the exceptions to the definition of a rental activity
• Apply the special $25,000 allowance for active participation, including the 2025 MAGI phase-out and the married-filing-separately rules
• Determine whether a taxpayer is a real estate professional and how the election to aggregate rental interests works
• Apply the seven material participation tests at overview level
• Recharacterize self-rental income and free suspended losses on a fully taxable disposition of the entire interest
• Place Form 8582 in the order of loss limitations