Hello the Bigger Pockets community! Thanks in advance for your help on how to best navigate this next chapter in life to build long term wealth for my family and I. My main question is: what is the best way for me to become a Real Estate Professional for tax purposes in 2024 so that my husband and I can shelter a large portion of his W2 income?

Quick background - I've worked in commercial real estate as an administrative professional for many years in my 20s and 30s. 3 years ago I became a mother to two girls, and during this time not only did I go full time mom to care for them, I also teamed up with my husband and together we built a small and growing real estate portfolio. We have around 10 long term multifamily properties in Cleveland Ohio, and several single family short term rentals here in California. Only recently we learned about the Real Estate Professional tax benefit and have decided to take advantage of it in 2024. From our understanding, since he works in a W2, if I work 750 hours annually as a Real Estate Professional, we can qualify for this tax benefit. What I'm having trouble deciding is how I should spend those 750 hours exactly - should I continue to invest in our own properties, even if the market is very challenging right now? Should I work for someone else in the real estate industry so that I can generate income, while I continue to invest in my own properties on the side?

Ideally longer term, I'd like to continue to be a real estate investor. However, I'm not sure if I can qualify as a Real Estate Professional if I'm just an investor. Do I need to become an agent and/or work for someone else in the industry? Longer term, I have 500k of my own savings that I'd like to invest but I'm pausing right now since I'm reading that the country my go into a recession in 2024. Should I continue to wait to deploy that cash until the best deals come onto the market after this recession, and simply work for someone else in the meantime? Does anyone have any advice on how to become a Real Estate Professional for tax purposes, specifically during this challenging economic situation? I hope this makes sense! Thank you so much in advance for your help!

Los Angeles County, California

2 Votes