RE aggregation election question

election under section 469(c)(7)(A).

election must be re-filed every year. I can't find any information anywhere to provide details on this, or if it is even true.

I find no indication that anything has changed. The election only need to be made in one year and applies to future years. When you say "now I am hearing that the rules have changed" can you be more specific?

wrote

Depreciation rules haven't changed. What has changed, or what has gotten more "clarification" if you will, are the capitalization rules. Look up Rev Proc 2012-19 and the unicap rules under 263A. The change reflect all capitalization rules going forward, so what may have been a "repair" in the past is going to be capitalized in the future, what may have been written off as "supplies" will get capitalized and depreciated in the future.

The change requires you to segregate the property, into "Units Of Property" (UOP) in which the replacement of a UOP (a roof let's say) isn't a repair, but a capital improvement - of the roof anyway. The NEW thing is the ability to treat the old roof as a disposal of that UOP and a gain or loss recorded accordingly. The new treatment is mandatory going forward.

Taxpayers have the ability to do an accounting change (Form 3115) and go back and recompute the gain and/or loss on UOP where a replacement was done. I'd caution heavily to look at the changes carefully and with competent counsel how to proceed accordingly.

Oh, this is all effective January 1, 2012. Yes, 2012.

Are you sure the original question was about depreciation? It didn't read that way to me.

The original question was *not* about depreciation.

The original question was about making an election to treat multiple rental properties as one activity for the purposes of meeting material participation requirements in order to qualify as a real estate professional, and thus not be limited to the $25K/$150K of income limits on deducting losses from passive RE activities.

properties as one activity for the purposes of meeting material participation requirements in order to qualify as a real estate professional, and thus not be limited to the $25K/$150K of income limits on deducting losses from passive RE activities.

Pursuant to Section 469(c)(7) and its regulations, once you make the election by attaching the applicable statement to your tax return, it remains in effect until such time you revoke it due to a material change in circumstances.

"Mark Bole" wrote

We're supposed to read the questions? Geeez. :-)

At this time, I plead the fifth. I have no clue as to what I thought I was reading.

what might such "material change in circumstances" be?

The burden of proof relating to a "material change in facts and circumstances" is with the taxpayer. The IRS doesn?t like taxpayer regroupings. One would have to research court cases to see what may have been acceptable.