The activity's average period of customer use will equal the sum of the amounts for each class. The numerator of the fraction is the gross rental income from that class of property and the denominator is the activity's total gross rental income. If the activity involves renting more than one class of property, multiply the average period of customer use of each class by a fraction. You figure the average period of customer use by dividing the total number of days in all rental periods by the number of rentals during the tax year. The average period of customer use of the property is 7 days or less. 9943 added Regulations sections 1.469.9(b)(2)(ii)(A) and (B) defining real property development and real property redevelopment. 9905 added Regulations sections 1.469-9(b)(2)(ii)(H) and (I) defining real property operations and real property management.

99 expanded Regulations section 1.469-9(b)(2) to define several terms used in determining whether a trade or business is a real property trade or business for purposes of section 469(c)(7)(C). See Regulations section 1.469-4(d)(6) for more details.ĭefinition of real property trade or business. 9943 added Regulations section 1.469-4(d)(6), which prohibits grouping of trading activities described in Temporary Regulations section 1.469-1T(e)(6) subject to section 163(d)(5)(A)(ii) involving a non-passive trade or business in which the taxpayer does not materially participate with any other activity or activities including other trading activities. If you are a calendar year taxpayer, the new provision applies to you in calendar year 2022. See Regulations section 1.469-11(a)(1) and (4) for additional information on applicability dates and early adoption. The new rules apply to tax years beginning on or after March 22, 2021, but you may chose to adopt these rules earlier.

Real estate passive income