New IRS Audit Guidelines Slams Real Estate Professionals

[Diane Kennedy]

If you are currently claiming the real estate professional status on your tax return to take full advantage of your tax losses, you could be in trouble from an IRS audit.

Some of the highlights of the new audit guidelines that we got our hands on late last night:

- If your property is inside an LP and you're an LP in it (not GP), you won't get the real estate loss deduction.

- Your hours spent in "investment" activities will not count toward your hourly requirement. You must be "active" in real estate, which means actually at the property and not just in meetings.

 

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[veli]

As a foreigner whos not always familiar with all the words, could you please let me know what LP and GP stands for? Thanx

 

[Diane Kennedy]

LP = Limited partnership or Limited partner
GP = General Partner

A limited partnership has two types of partners: a limited partner and a general partner.

You might want to take a quick read of "Business Structure Basics" to get some of the foundational concepts down.

 

[veli]

Ok, I guess I'll answer my own question. hehe I took a look at wikipedia and found info about Limited Partnership and General Partnership.

 

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[veli]

You beat me to it! Thanx for answering and yes I'll take a look at BSB

 

[Diane Kennedy]

Actually I need to update BSB anyway - I'll probably do that this weekend. SO MUCH HAS CHANGED.

I started a list this morning of the business structures I'd recommend today. They are completely different from what I would have recommended a year ago. So, thank you for the reminder.