new real estate professional HELP! I've just entered the business of building and managing residential properties. On July 1st 2012 I converted my primary residence to rental and then invested 125k building an additional rental on the lot have a nice positive NOI and some (~100k) of W2 income for the next several years. I'm just getting to know Schedule E. Assuming I qualify as an active RE business (more than 750 hours and so forth) I'd really like to know what benefits that will bring over the next several years. Let's get something off the chest - I am using Turbo Tax (yikes!) and I wonder if it is too dull a tool. Maybe I'm not understanding the IRS publications? What good does it do to qualify for the special passive activity rules, broadly speaking? If I give up on this business next year, what are the risks/rewards, generally? I have at least one more residential project in the works.... but when I finished the Tubotax process and then (experimentally) told the software that I DID NOT meet the rules to be an RE professional my tax refund didn't change. The bottom line question is: how does that RE status really bring a benefit - only in years to come? |