Changing tax status to a Real Estate Proffesional

[Julieanne Zenz]

Can anyone please clarify this- I have read and heard multiple times that if you spend more than half your work hours in RE you may classify yourself as an RE proffesional.  Of course, the benefit of this is to be able to take your losses (if you earn more than $150k)  instead of deferring them.  Here is my question- we have had real estate investments for over 10 years and have had to defer the losses until the property is sold.  I am now spending more than 50% of my work hours in RE but was told not to convert my employment status because I would loose those losses that had been being deferred.  Is this correct?  Anyone have any insight or suggestions?  Thank you in advance.

[Dave Toelkes]

@Julieanne Zenz,

My understanding is that you don't lose the previously suspended losses; they stay on your books.  If you gain RE Pro status, you can take your new annual net passive loss in full each year on your tax return, but only the new annual loss.  Previously suspended losses for a specific property are taken in full when the property is sold which is what you would have done without the RE Pro status..