real estate proffessional classification

[Sam Tamayo]

Hi, looking to claim the real estate professional for tax benefits.  I have a variety of qualifying activities on a part time basis that will qualify me, but am thinking of adding LSA (loan signing agent) to the mix.  Can anyone clarify if this trade of work qualifies for "real estate professional" ?

[Bruce Lynn]

Professional Real Estate professional status is not that easy to get if you have a full time job doing something else.

The main benefit is that it allows you to deduct passive losses against passive income from the way I understand it.

So if you have a bunch of rental properties lets say generating a lot of passive income and you want to offset that let's say with a large bonus depreciation passive loss, it may help you.

I am full time broker and investor and spoke with my CPA about it the other day and not sure I had the right mix of income and losses to help me much.  Looks like for the most part I will just have to carry forward the passive losses until we recapture that depreciation.   

I would suggest speaking with your CPA to see #1 if you qualify, and #2 if it would actually help you save or defer any taxes.

I would not think LSA would help you much unless you did a bunch of closings.....750 hours of professional activity is a lot of closings.   

From the way I understand it, you could not for example deduct the income from that activity which is active, with passive losses from another source.

https://www.thetaxadviser.com/issues/2014/jul/skarbnik-july2014.html#:~:text=To%20be%20a%20real%20estate,real%20property%20trades%20or%20businesses.