Actual tax law: real estate material participation

I wanted to clarify some misconceptions surrounding material participation in real estate. Here’s a common scenario:

Not Actual Tax Law: Buy a rental property, hire a management company, and drive to and from the property for work not essential to operations in order to meet material participation requirements.

Actual Tax Law:

1) Meaningfully participate in operations

2) Document your meaningful participation in operations

(And don't hire a property management company….unless they are really bad and leave significant operational activity left for you to do..)

If you want more actual tax law and how the court approaches material participation for real estate, you can watch it here on Youtube.

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