The Overlooked Tax Loophole That Turns Passive Losses Into Active Deductions


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Today’s topic: How limited partners can use real estate syndication losses to offset active income.

Most LPs assume syndication losses are passive—and useless against W-2 or business income. But with the right strategy, those losses can deliver real active tax savings.

In this article, we break down:

  • Why syndication losses are usually passive (and what that means)
  • The key exception: when passive losses can offset active income
  • How to qualify for Real Estate Professional Status (REPS)
  • What a “grouping election” is—and why it matters
  • How 500+ hours of material participation unlocks major tax savings
  • Real-world examples of this strategy in action

"Most investors stop at passive loss rules. But with REPS and the right grouping strategy, limited partners can unlock active deductions—even if they’re not the GP."

Check out the full article and learn how to put this strategy to work:


Thank you for reading. Please reach out and let me know what resonated with you. I read every email!

Cheers,

Sean

CPA | Founder of Maven Cost Seg

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