Real estate "professional" status with the IRS

[Pier Di Giorgio]

Does anyone who had claimed status as a Real Estate Professional with the IRS also have a full time job? I own 4 rental properties and I also work from home a medical supplies sales rep. I buy and manage the properties myself and I would like to claim status as a REPS. However, my total hours with my W2 job are 2080 per year. I appreciate any advise that you can provide. 

[Buddy Holmes]

@Pier Di Giorgio

I am not an expert, but can relate to this question. As a retired RE investor with about 5-8 SFR''s I was audited by the IRS.

I had clearly no W2 therefore all hours were in the RE side. So I could easily claim more than 50% in RE. I had a remote new construction STR going on and had documented the hours spent working the cleaning, continuing to add to the furnishing and landscaping of the STR.

It was 1:45 drive each way so there was a lot of miles, hours and expenses. 

The Auditor didn't buy it and disallowed the claim as RE professional. She claimed that the hours had to be spent on ONE property not the sum of all my SFR's and the STR! She also claimed that since I did not have a W2 job and did not commute to "work," the hours and miles to my STR was commuting to my job and not tax deductible.

Now you can easily say here o\in the blogs that she was not right and ...  

However in an Audit the Auditor is always Correct until your appeal.  I had great help through the Turbo Tax firm doing their  work for the added fee for the service when I did my returns. We took my case all the way to the Tax Court. 

They audited 3 years of returns 2014,15 and 16 and it took from 2017-2020 to answer the many request for more and more proof of expenses.   After a while they have impressed on you how bad it could be and that they hold all the cards.  

 If you want to try to use that claim, fine. I am quite sure that once audited, you will choose to pick your battles where you have a very strong defense!  In this case of the IRS, you have the right to remain guilty until you can prove yourself innocent!

God forbid  they get the money to hire 80,000 more IRS agents!