If you’re a contractor earning $300K+ and investing in rentals, there’s something you need to understand:

Rental losses are passive by default.

That means they do not offset:• W-2 income• S-corp income• Active construction profits

Once your income exceeds $150K, the small passive loss exception disappears.

But there’s a powerful strategy: Real Estate Professional Status.

It’s not a license.It’s not a job title.It’s a tax classification.

To qualify:• 750+ hours per year in real estate activities• More time than any other trade or business• One spouse must qualify individually

If structured correctly, rental losses can offset active income.

Example:$120K in real estate losses at a 40% tax rate = $48K in tax savings.

But this only works with:• Proper hour tracking• Material participation• Correct elections

Buying rentals isn’t the strategy.

Structuring them correctly is.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.