Involvement in a rental real estate activity making management decisions. Requires no specific number of hours.
If you make the decisions regarding the management of rental property you own, you are said to actively manage it.
Just what it sounds like: taking an active role in the management of an enterprise. This is a determining factor for the IRS in rental real estate issues. The rules for active participation are much easier to meet than the material participation rules. An active participant may generally deduct up to $25,000 of rental real estate losses against other income. An active participant must not be a limited partner or own 10 percent or less of the property. See also Material Participation.
A threshold definition used in tax law to define whether or not an individual is allowed to deduct losses in real estate investments; active participation requires a minimal recurring involvement in tenant selection, maintenance of properties, and decisions concerning rent levels and timing of a property purchase or sale.
The level of involvement that real estate owners must meet to qualify to deduct up to $25,000 of losses from rental real estate. Failure to pass this test could make such losses nondeductible under passive-loss rules.
Involvement in real estate ownership and management on a continuing basis as contrasted to passive participation. Tax laws provide greater tax benefits when the owner actively participates in real estate property and rentals.