In real estate, not all income is created equal—and the difference between passive and active can mean thousands of dollars in tax liability.

In this follow-up episode of The Legacy Academy, attorney and tax strategist Natalia Ouellette-Grice, JD, MBA continues her deep dive into Section 469 of the Internal Revenue Code, focusing on how investors can transform passive real estate activities into active trades or businesses. She explains the IRS’s default presumption that rental activities are passive, and what it actually takes to overcome that classification through material participation.

Natalia walks through the seven material participation tests outlined in the tax regulations and demystifies what truly counts as “active involvement” ve ...