New York denied a deduction for rental losses taken by a married couple. Under New York tax law, a taxpayer can take a deduction for rental losses if the taxpayer qualifies as a real estate professional. A taxpayer must meet specific requirements to qualify as a real estate professional, including:
- material participation in a real estate business; and
- minimum time requirements.
Here, the Division of Tax Appeals found the couple’s testimony and evidence lacked credibility because of numerous inconsistencies. As a result, the division ruled that the couple did not show that either spouse met any requirements to qualify.
Les, New York Division of Tax Appeals, Administrative Law Judge Unit, DTA No. 827190, November 2, 2017, ¶409-152