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The Real Estate Investor's Pocket Calculator, 2nd Edition by Michael C. Thomsett

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CHAPTER 11

TAX CALCULATIONS IN REAL ESTATE

Reporting Rules

Real estate has the most complex tax rules of all investment markets. Income tax rules generally do not allow investors to deduct losses on real estate programs, unless those losses offset similar gains or, when properties are sold, reduce the net gain that is reported. So those who place money in limited partnerships today—which were favored tax-shelter programs many years ago—cannot use those programs to produce losses.

When it comes to direct ownership of rental property, the rules are different. Real estate investors are allowed to deduct annual losses. This makes real estate the last ...

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