Self-rental real estate is real estate in which the owner of the real estate also participates as the lessee of that real estate. There are imporant tax planning implications to be aware of related to self-rentals. The following scenarios are a few of the scenarios in which the real estate would be considered self-rental:
Income from a self-rental is non-passive, but losses from a self-rental are passive. Income from a self-rental cannot be used to offset losses from a passive activity, which is a trade or business in which the taxpayer doesn’t materially participate. Additionally, taxpayers cannot offset profits from one self-rental with losses from another self-rental.
In regards to tax reform related to the Tax Cuts and Jobs Act, there are several situations taxpayers who own self-rentals should be aware of for tax planning purposes.
If you should have any questions related to self-rentals, please reach out to a Withum real estate team member or fill out the form below.
Author: Amy Lafontaine, CPA, Real Estate Services Group Team Member | firstname.lastname@example.org