Tax Question: Rental Income (Active or Passive).

[DCal430]

For tax purposes what differentiates active and passive rental income? What determines if rental income is considered active or passive?

Please use the stickied tax thread.
admin allisolm

[Sluggo]

There is a dedicated tax thread at the top of the page.

[Ns1]

Passive Activities

There are two kinds of passive activities.

Trade or business activities in which you do not materially participate during the year.

Rental activities, even if you do materially participate in them, unless you are a real estate professional.

Material participation in a trade or business is discussed later, under Activities That Are Not Passive Activities .

http://www.irs.gov/publications/p925/ar02.html