Wendy Wagner wrote:

- quote -

Material participation has no bearing on a rental activity.
You need to show that you ACTIVELY participated in the
activity.

These terms are defined in DIFFERENT subsections to IRC 469.

- quote -

No. You need to apply the correct form of participation to
your activity.

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Wendy Wagner <wendy[at]panix.com> wrote in

- quote -

From a fellow landlord:

I believe that if you are not classed as a "real estate
professional", the "material participation" test is of no
use to you since the law defines this type of rental as a
passive activity regardless of your participation. There is
a second test, which I guess is aimed at mom-and-pop
landlords, for "active management".

The purpose of this test is to allow a net passive loss from
rentals to be included on the 1040. The amount of loss that
may be taken is limited based on filing status and total
AGI. Excess net losses are carried forward. Maybe a
professional here knows if "active management" has been
challenged by the IRS, but given your statement, I would
have no qualms about claiming "active management". Of
course, if you can make it profitable, then the concern goes
away.

scott s.

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Nan Eklund <naneklund[at]aol.com> wrote:

- quote -

How about this situation:

I buy a property for $50,000. I put a lot of labor (and
some material) into it, and its value increases to $100,000.
I then donate it to charity. How much of a deduction do I
get?

Seth

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I own a house which was my primary residence. Got a new job
and relocated in August. Tried for a few months to find a
tenant on my own. Finally gave up and in late October signed
with a property management company who found me a tenant a
month later.

I'm trying to figure out if I'm subject to the passive
activity limits. I was materially participating for a few
months before we gave up and handed over the management to
someone else. I advertised, showed the house to a few
people, etc. I paid to keep the electricity and water
running so that it would be good to show and ready for the
tenant.

Is this case worth going to a professional and trying to
figure it all out, or should I just accept that there will
be no deductions? We're only talking $1000+ possibly in
deductions, but this year it'll make a big difference for
us.

Wendy

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Personal labor isn't deductible for anything, from rentals
to charity. Out of pocket expenses only.

Nan, EA in LA

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Steve wrote:

- quote -

No.

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"Steve" <gobucks36[at]earthlink.net> wrote:

- quote -

You may not legally include any amount of your personal
labor as a deduction for anything including rental property.

Wayne Brasch, CPA, M. S. Taxation

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gobucks36[at]earthlink.net (Steve) writes:

- quote -

No.

Phil Marti
Topeka, KS

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Is it possible to deduct the value of my personal labor that
I have put into my property? This has never been an issue
for me in the past, but I had a lot of hours there this
year. If possible, what is the formula used?

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