Material participation is a tax term referring to the substantial, continuous, and regular involvement in business operations necessary to qualify for certain tax deductions related to real estate losses.
Passive activity income refers to profits derived from business activities in which the taxpayer does not materially participate or rental activities, which are typically deemed passive regardless of material participation.
A Qualified Real Estate Professional is a taxpayer who qualifies for an exception to passive activity income rules through significant material participation in real property trades or businesses.
