Discover the difference between "passive" and "portfolio" rental activities for tax purposes. An activity is classed as either “passive” or “portfolio” depending upon income. (Reg. 1.469-2T(f)).

Losses are passive, but any income in excess of losses is non-passive! Remember that “significant participation” means 100+ hours of participation, but not enough participation to meet the material participation tests (above).

Code Sec 469 includes a self-rental recharacterization rule that applies to taxpayers who rent property to a trade or business in which they materially participate, with the result that net rental income from an item of property is converted from passive to non-passive but net rental loss from an item of property remains passive. (Reg. 1.469-2(f)(6)) 

Tangible property held for rental will be considered non-depreciable if less than 30% of its unadjusted basis is depreciable. There is no $25,000 allowance for losses.

Is not considered passive. Special rules apply to this, not covered here.