Originally Posted by mytaxes2013
#1;I qualify as real estate professional for the rentals we have as I had been actively involved in maintaining them.
#2;In addition to maintaining these rentals, I also spent time to become an agent although I did not buy or sell any property or to any of my clients.
#3;How do I claim the expenses as these are not expenses related to my rentals? Do I need to open a business and claim them as business expenses?
#4;If so, I cannot show any income for last year.
#1;unless you are a r/e professional dealer, your rental income, even if you are actively/materially involved in the rental home mgmt., your income is still PAL not active income.
#2;you actually can not deduct your time that you spent to become an agent / to manage the rental home.however, your engagement time can be counted to determine if you qualify as an active/materially participating party.
#3;Aslongas you are a r/e pro/ dealer, you need to file Sch C / SE , not Sch E of 1040.then you can deduct your r/e related r/e biz exp on Sch C by offsetting them against other ordinary income. If a dealer is purchasing properties often enough to be considered a dealer, the costs mentioned will be capitalizable as inventory. If less frequent, they will be capitalizable as part of y yur nvestment in the properties which would be reported on Sch D/form 8949. a RE Pro and a dealer are not necessarily synonymous. A Dealer could have material participation without meeting the 750 hour test to be a RE Pro.
#4;I guess so as you are not a r/e pro or a dealer.