Proving 750 hours for deductions

[Lance Mundo]

How can I prove 750 hours of work, and more work than my W2 job in order to qualify for maximum deductions when filing my income taxes? I want to reduce my federal income tax to zero. Are we using a time log? What is an IRS acceptable way of doing this? 

[Michael Plaks]

We all want to reduce taxes to zero, too. It does not mean we can.

If you have a W2 job which is part-time, let's say 25 hours per week, you will need to be able to have your employer confirm it in writing. If you won't be able to get such a written confirmation from your employer, then the IRS assumes you work 40 hours a week at your job.

You then need to show 41 hours of qualified hours spent on real estate every single week, and not 750 hours, documented in a time log. I consider proving 41 hours a week on real estate unrealistic. And they have to be actual work. Watching podcasts and reading BiggerPockets forums does not count.

Maybe your job is 25 hours per week, then you need to document 26 hours in real estate per week. This is 1,300 hours per year.

If you're married, maybe your spouse can qualify. Otherwise, you need a solid log and a lot of hours.

If you pass this hurdle, you will need to generate enough allowable losses to offset your W2 income, which also comes with complications.