Active Participation

Description and Definition of Active Participation

Active Participation refers to the level of involvement that real estate owners must meet to qualify to deduct up to $25,000 of losses from rental real estate. The rules for active participation are much easier to meet than the material participation rules. An active participant must own more than 10 percent of the property and cannot be a limited partner.

Active Participation also refers to a test for determining deductibility of IRA deductions. Active participants in employer retirement plans are subject to IRA deduction phase-out rules if adjusted gross income exceeds certain thresholds.

Resources

See Also

Further Reading

• Active Participation in the West's Tax Law Dictionary
• Active Participation in “A Dictionary of Taxation”