Real Estate Limited Partnership Tax Advantages

Limited partnerships have been available for many years. Prior to the extensive overhaul of the federal taxation of real estate investments in the 1980s, they were a common method of real estate  investing. Up until that time, all losses from real estate  were fully deductible, and these loopholes created opportunities for aggressive tax management to avoid legal tax liabilities. To learn more about the real estate limited partnership visit
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In 1986, Congress passed new tax regulations that eliminated the favorable tax treatment of most losses unless the real estate investor was an active participant. To qualify as an active participant, an individual must be involved in direct management decisions of the property, although the day-to-day rental activities of collecting rent, overseeing repairs, and paying bills can be delegated to a property manager.

Further, the federal tax code limits the deductibility of your passive  losses  against  your earned  income (salary, dividends, and interest) to a maximum of $25,000, as long as your adjusted gross income doesn’t exceed $100,000. The maximum $25,000  passive  loss  deduction phases out at a ratio of $1 for every $2 in adjusted gross income between $100,000 and $150,000. For real estate owners with adjusted gross income exceeding $150,000, any passive losses are carried forward to future years or until the property is sold.