You pass the real property test if you have ‘real property’ in your business on a continuing basis that has a value of at least $500,000. Real property includes:

• land
• structures, such as buildings, fixed to the land
• interests in that property, such as a lease of that property.

For this test, real property doesn’t include a dwelling and adjacent land that is used mainly for private purposes, nor fixtures you own as a tenant.

If you’re a member of a partnership and all the other partners are individuals, the value of the real property used in the whole partnership business must be at least $500,000 before individual members can deduct losses. Unless you carry on a similar business independently then you can include the value of any property you own outside the partnership, if the partnership uses it on a continuing basis for the business.

If you have partnership members that are companies or trusts, you must exclude the value of any real property attributable to them.

Also exclude the value of any of the property that individual partners own in their own right and that are not used in the partnership business.