Ezel / IRS Rulings / 200919035

CCA 200919035: Rental property debt could qualify under section 108(c)

Number
200919035
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
R 1986 Qualified Business Indebtedness (Repealed 1986)
Topics
Income and deductions
Code sections
§ 108, § 280A
Ruling dated
February 20, 2009
Publicly released
May 8, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that debt incurred in connection with real property used in a trade or business could qualify as qualified real property business indebtedness under section 108(c). Whether the property was residential or nonresidential did not matter. The important distinction was between business use and personal use. Rental property generally could qualify, but personal use for more than 14 days could prevent it from being treated as business property under section 280A(d).

Ruling snapshot

  • Question: Could debt connected with residential rental property qualify as qualified real property business indebtedness?
  • Outcome: Advice given: the debt could qualify if the property was used in a trade or business rather than for personal use.
  • Key authorities: IRC §§ 108(c), 280A(d).

Full text (IRS public release)

ID: CCA-220170-09 Number: 200919035
Release Date: 5/8/2009
Office: ----------------
UILC: 108.01-03 R 1986

From: ------------------
Sent: Friday, February 20, 2009 5:01:27 PM
To: -------------------
Cc:
Subject: RE: IRC 108(c)

--------- --to answer your question – yes. The term at issue is “qualified real property business indebtedness.” If the indebtedness was incurred by the taxpayer in connection with real property used in a trade or business --- it qualifies. Whether it’s residential or non residential is irrelevant. The distinction is between personal use and business use. If I owned rental property (not my principal residence, which would be personal use), in general, that rental property is ok under section 108(c). Some taxpayers may own rental property but if they use that property for personal use for more than 14 days it no longer qualifies as business property. See section 280A(d). I hope this helps. Feel free to contact me at anytime. My phone number is -------------------.

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