catax Posted February 20, 2008 Report Share Posted February 20, 2008 If a taxpayer has an out of state rental and contract with a property management company can they be considered to actively participate in their rental? They do make some management decisions, some involvement in approving new tenants, approve all expenditures and other decisions regarding the rental are ultimately theirs to make. They even travel to the rental a few times or more to check on things. What are your thoughts on if they actively particpate or not? What if the property was not out of state do you think that hiring a management company would cause the taxpayer to be an active participant? Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted February 20, 2008 Report Share Posted February 20, 2008 If a taxpayer has an out of state rental and contract with a property management company can they be considered to actively participate in their rental? They do make some management decisions, some involvement in approving new tenants, approve all expenditures and other decisions regarding the rental are ultimately theirs to make. They even travel to the rental a few times or more to check on things. What are your thoughts on if they actively particpate or not? What if the property was not out of state do you think that hiring a management company would cause the taxpayer to be an active participant? I think they are active....I would not remove "active" status from a landlord solely based on the fact they run it through a management company. It sounds like they "activily" make decisions that affect the rental and even physically go there on occasion. Quote Link to comment Share on other sites More sharing options...
Jake Posted February 20, 2008 Report Share Posted February 20, 2008 I would consider them as active participants in a rental activity. Quote Link to comment Share on other sites More sharing options...
catax Posted February 20, 2008 Author Report Share Posted February 20, 2008 Another question: So what would be a scenerio when a taxpayer wouldn't be considered an active participant. If they just reliquish all control to another and have nothing to do with it at all? Quote Link to comment Share on other sites More sharing options...
jainen Posted February 20, 2008 Report Share Posted February 20, 2008 >>just relinquish all control to another and have nothing to do with it at all?<< Yes. That's when they say, don't call me with any problems, you figure it all out and just send me a rent check every month. Active participation isn't a very high standard. Reviewing the management company's notes once a year is probably enough. Don't confuse it with material participation, though. Quote Link to comment Share on other sites More sharing options...
catax Posted February 20, 2008 Author Report Share Posted February 20, 2008 >>just relinquish all control to another and have nothing to do with it at all?<< Yes. That's when they say, don't call me with any problems, you figure it all out and just send me a rent check every month. Active participation isn't a very high standard. Reviewing the management company's notes once a year is probably enough. Don't confuse it with material participation, though. You hit the nail on the head. In my mind I was confusing active participation with material participation. I wasn't so concerned with my clients with rentals close to home but was more concerned with the ones that were out of state. I appreciate everyones clarification I can't see were any of my clients wouldn't qualify for "active particpation", however, some will be phased out. I haven't had a case yet were one qualified for "material participation". Thank for clearing that up for me. Quote Link to comment Share on other sites More sharing options...
OldJack Posted February 20, 2008 Report Share Posted February 20, 2008 How soon we all forget!! I too first thought of material participation. Quote Link to comment Share on other sites More sharing options...
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