The Multifamily Real Estate Experiment Podcast

MFREE 118 Trailer # 5 with Gian Pazzia: Could This Strategy Let You Use Passive Losses Against Active Income?

Shelon Hutchinson Season 3 Episode 118

Aloha, It’s Shelon "Hutch" Hutchinson here! If you’re enjoying 'The Multifamily Real Estate Experiment' podcast, please like, comment, and share our episodes to help us reach and inspire more people. Thank you for your support!

Most people don’t realize this, but if one spouse qualifies as a real estate professional, the entire household may benefit on their taxes. Even W-2 income could be offset.

Gian Pazzia breaks down how it works, what the 750-hour rule really means, and how couples are using this to take control of how their income gets taxed.

It’s not a loophole. It’s strategy.

#TaxPlanning #RealEstateProfessional #W2Strategy

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Speaker 2:

If your spouse, is a real estate professional for tax purposes, and you file a joint tax return, now all of a sudden you are allowed to use the deductions from that real estate that you purchased against. The income you're making at your W2 job. So that opens up a whole other world of possibilities in terms of being able to manage and shelter your taxable income. Now, there are some caveats to that strategy, One. Your spouse, in order to meet the definition of a real estate professional for tax purposes, they have to spend 750 hours, doing real estate activities. A list of activities that qualify and, those activities generally include, managing your properties. Okay. If you buy a few, let's say single family home rentals, right? They buy enough of'em, the wife or the husband, whoever the spouse is that has the time to be a real estate professional, manages those properties. They meet the hours requirements. Okay? And then at that point, they can. Go out and buy, be an LP in a lot of deals, right? Once they meet that criteria. They can start netting all their real estate activities together. So they could be an LP in deals once the spouse meets that definition.