In Chief Counsel Advice (CCA), IRS has concluded that based on the legislative history of Code Sec. 163(h), until regs are issued, taxpayers may use any reasonable method in allocating debt in excess of the acquisition and home equity debt limitation, including the exact and the simplified methods in temporary regs issued under a previous version of Code Sec. 163(h), the method in Pub 936, or a reasonable approximation of these methods.
Tax
Don’t lose out on rental real estate losses
If a person owns rental properties, there’s a good chance at least one of them will generate a loss during ownership. But the passive activity loss (PAL) rules can make it difficult to deduct those losses. If rental real estate is a significant activity, it pays to review the situation to determine whether one meets the IRS’s definition of “real estate professional.” This article explains some of the circumstances in which one may qualify and how it might be possible to convert passive losses into non-passive losses, creating substantial tax benefits.