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Ken D'Alessandro

Broker Associate

Tax Shelter



The Tax Reform Act of 1986 killed real estate as a major tax shelter, but Congress realized that in its efforts to modify the sheltering of income from rental real estate, it had negatively impacted the small investor as well. These people who saved their money over the years and had invested in a small income property to enhance their retirement income were unintended targets for the TRA 1986. Congress, therefore, provided exceptions to the passive loss limits for the investor who earns less than $100,000 ADJUSTED gross income, they can deduct up to $25,000 of losses each year from real estate investments, provided they qualify.

Just because most of the real estate tax shelter is gone does not mean that real estate is not a good investment. Although the biggest result has been the depressed market values of many large properties, smaller income properties still make financial sense.

There are many investment opportunities available for the 'small investor', single family homes, small apartment buildings, condominiums, bank foreclosures and rehabs , just to name a few of the opportunities that are available right now. 

If you are serious about investing to reduce your tax liability, and would like more information about the guidelines established by the Tax Reform Act 1986, contact us to see if you qualify.