What are the Self Rental Recharacterizations rule?

The "Recharacterization Self Rental" rule generally applies to self-rented property and applies to taxpayers who rent property to a trade or business in which the taxpayer materially participate.

The IRS has stated that for any;

1. "Losses incurred from the rental of such property to be characterized as Passive, subject to the normal passive activity loss limitation rules.

2. But, any Profit from the rental of such property to be characterized as Non-Passive. [IRS Reg 1.469-2(f)(6)]. The intent is prevent these gains to be offset against other passive activity losses by the taxpayer."


For more of the Self Rental Recharacterizations rule, click here.