If you do not have a net profit from rents in 3 out of the last 5 years, then the property is presumed to be rented not for profit. In that case, you cannot offset excess losses against other income--only income from the property. You should see a tax professional, though, if you have questions.
This doesn't sound right to me. It sounds like what you are saying is that if you make a bad investment decision then you will be penalized by the IRS by not being able to apply losses against your other gains. 
Topic: Tax crew:Is Not-for-profit rental a"property held for the production of income"? (Read 950 times)
August 14, 2014, 12:29:51 AM
August 13, 2014, 06:56:32 AM
I'm not a tax / law guy, but just economically speaking if you are paying yourself a salary then you are receiving income from the properties. Profit and income are two different economic concepts.
August 13, 2014, 06:48:18 AM
If you do not have a net profit from rents in 3 out of the last 5 years, then the property is presumed to be rented not for profit. In that case, you cannot offset excess losses against other income--only income from the property. You should see a tax professional, though, if you have questions.
August 13, 2014, 01:36:36 AM
If you have a rental property that generates negative income then the property itself would not be treated any differently then if the property was profitable for you. The only real difference is that you would have made a bad investment.
August 11, 2014, 05:53:05 AM
Can you clarify on what you mean by a "not for profit rental".
You rent without the intention of making profit. The loss caused by the rental that you are allowed to deduct is limited to the income from it. You can't deduct excess loss against your main income.Its a classification by the irs
August 11, 2014, 05:38:11 AM
Can you clarify on what you mean by a "not for profit rental".
You rent without the intention of making profit. The loss caused by the rental that you are allowed to deduct is limited to the income from it. You can't deduct excess loss against your main income.Its a classification by the irs
August 11, 2014, 05:35:08 AM
Can you clarify on what you mean by a "not for profit rental".
August 11, 2014, 05:23:56 AM
Technically a not for profit rental does generate some income, though the net income is negative after all the deductions. So does that make it a property held for the production of income (in Federal income tax context)?
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