My client is classified as a material participant and real estate professional. He has 12 rental properties. Is it advisable to place all properties under one to maintain the material participation classification. How do you do this election?
It depends on the taxpayer's specific circumstances. Google "469(c)(7)(A)" for innumerable discussions of the pros and cons.
Schedule E and you make the election on the Schedule E Worksheet for material Participation. You will have the capability to list the properties also in the process of completing the worksheet and form
I answered your first question, and Mt Juliet answered the second. Give each of us half a point.
Also, have you already made your election to group your real estate activity?
If not, in order to elect to treat all interests in rental real estate as a single rental real estate activity, you should file a statement with your income tax return for the taxable year. It can read something like:
"In accordance with §1.469-9(g)(3), the taxpayer hereby states that he (or she) is a qualifying real estate professional under IRC §469(c)(7), and elects under IRC Sec. 469(c)(7)(A) to treat all interests in real estate as a single rental real estate activity."
I'm sure this in other IRS publications. But right now I found it on page E3, top of 2nd column of following link:
