My CPA Doesn’t find benefit in Real Estate Professional Status

[Lauryn Meadows]

Question for my Investher CPAs.

My husband works full time in our real estate business, I believe he should have no problem qualifying for real estate professional status.

I work at W2 and have a 1099. We also flip houses.

We purchased and rehabbed a 4 plex this year, that I would like to take accelerated depreciation on to offset income from my W2/ 1099 and our flipping business.

Question 1- did I need to have a cost segregation study done in 2021 in order to do this?

My CPA says we don’t want for my husband to qualify as a real estate professional status because he will be subject to self employment tax, and not receive social security credits (not super concerned about that because the plan is to be FI long before social security kicks in- if it’s even a thing by the time we are that age.)

Thanks for any advice. 

[Natalie Kolodij]

Your CPA is an idiot. 

Find one who specializes in real estate taxation. 

RE pro doesn't default your income to SE tax. 

Your flips should already be paying SE tax. Your rental income will be non-passive (allowing losses) but still not subject to SE tax even if he's re pro. 

You do need a cost seg, and then you can absolutely use that loss to offset your other income if he qulaifies.