Property Management, Passive Activity Loss Limitation and Depreciation

[Amol Kulkarni]

Hi all,

I've been reading about the Passive Activity rules that prevent passive losses (eg Depreciation) from being offset against ordinary income. Unless of course, the taxpayer shows material involvement and claims to be a real estate professional, spending 750 hours per year.

Employing a property manager to manage out of state properties makes it virtually impossible to stay actively involved and spend 750 hours. 

I'd like to understand how people are dealing with this. Is there a way to still stay actively involved with property management in place at the property? Or is the only option available to carry the depreciation and losses forward? 

Would appreciate any thoughts and insights on this.