At-Risk Rules Calculator 2026 β Section 465 Loss Limitation
Calculate your Section 465 at-risk amount, deductible loss (limited to at-risk), and suspended loss carryforward. Covers recourse debt, qualified nonrecourse RE debt, and recapture scenarios.
$
Cash and FMV of property contributed to activity $
Personally liable loans β counts as at-risk $
Qualified real estate nonrecourse β counts as at-risk $
Non-real-estate nonrecourse β does NOT count as at-risk $
Total loss before at-risk limitation $
Losses suspended in prior years under Β§465 $0
Deductible Loss This Year
$0
At-Risk Amount
$0
Suspended Loss Carryforward
$0
Ending At-Risk Balance
Section 465 At-Risk Calculation
How Section 465 At-Risk Rules Work
The at-risk rules prevent taxpayers from deducting losses in excess of their economic investment in an activity. Your at-risk amount is determined by what you have personally invested or personally guaranteed. Deductible losses cannot exceed your at-risk amount β excess losses are suspended and carry forward to future years.
What Counts as At-Risk
At-Risk Amount = Cash & FMV of Property Contributed
+ Recourse Debt (personally liable)
+ Qualified Nonrecourse Financing (real estate only)
β NOT: nonrecourse debt for non-RE activities
Deductible Loss = MIN(Current Loss + Prior Suspended, At-Risk Amount)
Suspended Loss = MAX(0, Loss β At-Risk Amount)
+ Recourse Debt (personally liable)
+ Qualified Nonrecourse Financing (real estate only)
β NOT: nonrecourse debt for non-RE activities
Deductible Loss = MIN(Current Loss + Prior Suspended, At-Risk Amount)
Suspended Loss = MAX(0, Loss β At-Risk Amount)
Example
Real estate LP: $100K cash + $50K recourse + $200K qualified nonrecourse, $80K loss:
At-risk amount: $100,000 + $50,000 + $200,000 = $350,000
Current year loss: $80,000
Loss β€ At-risk amount: full $80,000 deductible
Ending at-risk: $350,000 β $80,000 = $270,000
(Must then check passive activity rules β Β§469)
At-risk amount: $100,000 + $50,000 + $200,000 = $350,000
Current year loss: $80,000
Loss β€ At-risk amount: full $80,000 deductible
Ending at-risk: $350,000 β $80,000 = $270,000
(Must then check passive activity rules β Β§469)
Extended
At-Risk vs Passive Activity Loss Interaction
See how Section 465 at-risk rules interact with Section 469 passive activity loss rules, and model recapture scenarios
See how at-risk rules interact with passive activity loss rules, and model what happens if at-risk goes negative (recapture scenario).
At-Risk vs Passive Activity Loss β Two-Stage Filter
| Stage | Test | Your Result | Loss Treatment |
|---|
Recapture Scenario β What If Nonrecourse Refinancing Reduces At-Risk?
| Scenario | At-Risk Change | Recapture Income | Tax Impact (at 37%) |
|---|
Planning Note: At-risk rules apply per activity. Real estate professionals with separate rental activities must track at-risk basis per property. Refinancing recourse debt with nonrecourse debt can trigger at-risk recapture even if no cash changes hands. Always track at-risk basis separately from tax basis.
Frequently Asked Questions
What are the Section 465 at-risk rules?
Section 465 limits the deductibility of losses from a business or investment activity to the amount you have "at risk" in that activity. You are at risk for: (1) cash and property you contributed; (2) recourse debt β amounts borrowed for which you are personally liable; (3) qualified nonrecourse financing for real estate activities (loans from unrelated lenders secured by real property). Nonrecourse debt for non-real-estate activities does not count as at-risk and cannot support loss deductions.
What is qualified nonrecourse financing for real estate?
Qualified nonrecourse financing is a specific type of real estate debt that counts toward your at-risk amount even though you are not personally liable. To qualify, the loan must be: (1) secured by real property used in the activity; (2) obtained from a qualified person β a commercial bank, government agency, or unrelated lender (not a related party); (3) not convertible to an equity interest. A standard commercial real estate mortgage typically qualifies. This exception allows real estate investors to take depreciation and other deductions that would otherwise be limited by the at-risk rules.
When does at-risk recapture occur?
Recapture under Section 465 occurs when your at-risk amount drops below zero. This can happen if you receive distributions, the activity generates income that reduces your investment beyond zero, or if you refinance recourse debt with nonrecourse debt (the recourse portion removed from at-risk). When at-risk goes negative, the amount by which it goes negative must be included in income β this is the recapture. The recaptured amount restores your at-risk basis.
How do at-risk rules interact with passive activity rules?
The at-risk rules apply before passive activity loss rules (Section 469). You must first pass the at-risk test before a loss can potentially be deducted. Even if a loss passes the at-risk test, it may still be suspended under the passive activity rules if you are a passive investor. The sequence is: at-risk limitation first β passive activity limitation second β loss is deductible (if it passes both tests and you have sufficient basis). Suspended at-risk losses carry forward separately from suspended passive losses.
Can suspended at-risk losses ever be released?
Yes. Suspended at-risk losses are released when your at-risk amount increases in a future year. For example, if you contribute additional capital, make a personal loan to the activity, or the activity generates income that increases your at-risk basis, previously suspended losses can be deducted in that later year. Additionally, when you dispose of the entire activity in a fully taxable transaction, any remaining suspended at-risk losses are released and deductible.