Bruce owns a small apartment building that produces a $25,000 loss during the year. His AGI before considering the rental loss is $85,000. Bruce must be an active participant with respect to the rental activity in order to deduct the $25,000 loss under the real estate rental exception.

Question

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To deduct a rental loss under the real estate rental exception, the taxpayer must be an active participant with respect to the rental activity. If Bruce meets this requirement, he can deduct the $25,000 loss against his AGI of $85,000, subject to limitations.

Bruce Owns a Small Apartment Building That Produces a $25,000