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Updated almost 7 years ago,

User Stats

4
Posts
2
Votes
Sarah Lawrence
  • Newburgh, IN
2
Votes |
4
Posts

Real estate professional criteria

Sarah Lawrence
  • Newburgh, IN
Posted

Hi,  I am very new to real estate investing. We have a had rental property for several years, but I want to take this to the next level.  We have a major repair in our rental this year and I know that we are going to exceed the limit for allowable passive losses.  I am curious of how everyone else does this.  Do you classify yourself as a real estate professional for use in the given scenario: The IRS rules for claiming Real Estate Professional Status are very clear, and require that two key criteria be met in the given tax year:

  1. More than half of the professional hours worked throughout the year must have been devoted to material participation in real estate activities;
  2. More than 750 hours of material participation in real estate activities in the tax year being considered.

Or do you run it as a business as and use a schedule C?  For the real estate professional status, currently I work approximately 40 hours every 2 weeks at my current job, so would I have to work at least 21 documented hours every 2 weeks to meet the first criteria?  I apologize for being so ignorant, I just want to get started right as this is year zero. Thanks in advance for any advice!

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