Passive Activity Loss Limitation Checker 2026-2030

Step 1 - Classify the activity

What kind of activity is this?

Rental activity and the exceptions that remove an activity from rental status: IRC §469(c)(2), (c)(4); Treas. Reg. §1.469-1T(e)(3)(i)-(ii). Working interests: §469(c)(3). Portfolio income: §469(e)(1).

Is the interest held as a limited partner in a limited partnership?

A limited partner materially participates only under tests 1, 5 or 6 below: IRC §469(h)(2); Treas. Reg. §1.469-5T(e)(2). Limited partners also cannot actively participate for the §469(i) allowance: §469(i)(6)(C).

Material participation (Treas. Reg. §1.469-5T(a))

Your hours in the activity

Include your spouse's hours: §469(h)(5); Reg. §1.469-5T(f)(3). Investor-type work (reviewing statements) does not count: Reg. §1.469-5T(f)(2)(ii).

Most hours by any other individual

Include employees and contractors who are not owners. Used for tests 2 and 3.

Hours in all significant participation activities

Total for all trade or business activities where you worked more than 100 hours but did not materially participate under tests 1-3 and 5-7, including this one. Test 4 only.

Of the 10 preceding years, years you materially participated

Test 5 needs any 5 of the 10 immediately preceding years (not necessarily consecutive).

Is it a personal service activity?

Reg. §1.469-5T(d).

If personal service: preceding years you materially participated

Test 6 needs any 3 preceding years (not necessarily consecutive).

Test 2: my participation was substantially all of the participation of all individuals (owners and non-owners) in the activity for the year.

Test 7: on all the facts and circumstances I participated on a regular, continuous and substantial basis. Does not count if I worked 100 hours or less, and management time does not count if someone else is paid to manage or someone else spent more management hours: Reg. §1.469-5T(b)(2)(ii)-(iii).

Real estate professional (IRC §469(c)(7))

Hours in real property trades or businesses in which you materially participate

Development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing or brokerage: §469(c)(7)(C). Employee services do not count unless you own more than 5% of the employer: §469(c)(7)(D)(ii). On a joint return, one spouse must meet both requirements alone: §469(c)(7)(B).

Total hours of personal services in all trades or businesses

Include the real property hours. More than one-half of the total must be in real property trades or businesses in which you materially participate: §469(c)(7)(B)(i).

I made the §469(c)(7)(A) election to treat all my interests in rental real estate as one activity. Without the election each rental property is tested separately for material participation (§469(c)(7)(A)(ii)); enter hours above for the single property being tested.

Step 1 result - Is the activity passive?

Step 2 - Form 8582 limitation and $25,000 special allowance

Enter the amounts that belong in Form 8582, Part IV (rental real estate with active participation) and Part V (all other passive activities). An interest held as a limited partner, or one in which you own less than 10% by value or do not actively participate, belongs in Part V and does not qualify for the special allowance: IRC §469(i)(1), (i)(6). Enter all amounts as positive numbers.

Filing status

IRC §469(i)(5); Form 8582, Part II caution and line 5 and 8 instructions.

Modified adjusted gross income ($)

AGI figured without passive activity losses, taxable Social Security, deductible IRA contributions, the self-employment tax deduction, the student loan interest deduction and the FDII/GILTI deduction: IRC §469(i)(3)(E); Form 8582 instructions, line 6.

Part IV - Rental real estate with active participation

1a Net income ($)

1b Net loss, current year ($)

1c Prior years' unallowed losses ($)

Part V - All other passive activities

2a Net income ($)

2b Net loss, current year ($)

2c Prior years' unallowed losses ($)

Notes, assumptions & sources

Statutory - not indexed for inflation, identical for 2026-2030

Assumptions & sources

Parameter	Value (all years 2026-2030)	Status	Citation

The dollar amounts in IRC §469(i) are fixed by statute. The text of §469 contains no inflation adjustment, and Rev. Proc. 2025-32 (the 2026 inflation adjustments) contains no §469 item, so no year selector or projection is needed. Projected, inflation-indexed figures do not apply to this tool. OBBBA (P.L. 119-21) did not change §469 for these years; verify any later legislation before relying on a future year.

Other limitations apply first or after. Apply the basis limitation (IRC §704(d) or §1366(d)), the at-risk rules (§465) and the §469 limitation in that order, then the excess business loss limit of §461(l). See Form 8582 instructions, "Coordination With Other Limitations."

Last verified: October 29, 2026

Sources: IRC §469(a), (c), (d), (e), (g), (h), (i) (law.cornell.edu/uscode/text/26/469); Treas. Reg. §1.469-1T(e)(3), §1.469-5T(a)-(f) (law.cornell.edu/cfr/text/26/1.469-1T and 1.469-5T); Form 8582 and Instructions for Form 8582 (2025), irs.gov. Educational estimate only; the rules are fact-dependent and subject to IRS challenge.

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