I wasn't intending to criticize you for the example. I just didn't (and don't) want to go off on a tangent. Plus, the mechanics and strategies of passive losses are not susceptible to being understood from a few sentences on a chat board. While it is correct that no one invests in a production to lose, taxes very much factor into one's aversion to losing money. I'll just add one thing which is that investing in a REIT is just one was to participate passively in real estate.