Tax Facts

8694 / What rules apply for determining whether a taxpayer has amounts “at risk” when the taxpayer receives qualified nonrecourse financing with respect to the purchase of real property?

An investor in real estate (excluding mineral property) is considered at risk with respect to nonrecourse financing if:

(a) no person is personally liable for repayment (except to the extent provided in regulations);

(b) the financing is secured by real property used in the activity;

(c) the financing is borrowed with respect to the activity of holding real property;

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