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Updated over 7 years ago,
Active vs Passive Losses on Rental
Hi BP, first post, although I've been lurking and listening to the podcast for a while now.
I was looking over my tax returns as we prepare some immigration documents for change of status for my wife and noticed in 2015 Schedule E/ form 8582 I didn't deduct the passive losses from my W2 income/AGI, but in 2016 I did.
I used H&R block both years, and can't imagine anything changed year over year other than 2015 is 5mo of rental income, and 2016 was 12. From what I've been able to make sense of, I definitely am not a real estate professional, but am considered "active" participant since I chose the tenants, wrote the lease, hire repairs, etc (direct from the IRS guidelines). The way I could interpret it is because I make <100k AGI/ W2 income, I was allowed to deduct that rental loss (up to 25k), and for whatever reason didn't happen in 2015 and I missed out on a deduction.
The other option is I screwed up the 2016 return and need to amend it and pay back the deduction?
Thanks!