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Updated over 1 year ago on . Most recent reply presented by

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Japnik Singh
  • Investor
  • Fremont
6
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5
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Becoming a Real Estate Professional with W2 Income: Need Your Advice!!

Japnik Singh
  • Investor
  • Fremont
Posted

Hello, Real Estate Enthusiasts!

I'm at an exciting juncture in my journey towards becoming a real estate professional. While I'm all in on this new career path, there are a few things I'm still trying to figure out. Particularly, I'm looking to offset deferred W2 income from a previous employer (I don't work any hours there currently) with real estate depreciation and operational losses.

So here are the questions I'm grappling with, and I'd truly appreciate your expert opinions:

Questions:
  1. W2 Income and RE Professional Status:
    • Can you qualify as a real estate professional while still receiving deferred W2 income from a previous job?
  2. The 750-Hour Requirement: Strategies and Tips:
    • How do you recommend accumulating the required 750 hours of real estate activities?
    • Do tasks like preparing for a real estate license, commuting, and researching properties count toward this time?
    • Does research time that ultimately leads to a property purchase count?
    • What about time spent managing tenants, say on Airbnb?
  3. Active Losses and Income Types:
    • How do active losses from real estate investment typically offset other types of income? Do they tackle W2 income first, or passive income like dividends?
  4. Year-End Property Purchase and Depreciation:
    • If I buy a property on December 31, can I still claim depreciation for that year?

I'm committed to working full-time as a real estate professional and will have my first property soon. I want to ensure I'm following all guidelines and not missing anything crucial.

Your insights will be invaluable to me, so please drop your thoughts and advice in the comments below!

Thank you for your time and expertise!

Most Popular Reply

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Michael Plaks
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
6,080
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Michael Plaks
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
Replied

@Japnik Singh

1. Depends on the timing. If you quit in January - probably yes. If you quit in September - probably no.

2. Very complex question, not for an online forum. Also, AirBnB has nothing to do with REP status: https://www.biggerpockets.com/forums/51/topics/1122635-the-s...

3. Dividends and W2 are taxed the same in most cases. 

4. Not unless you bought it completely ready and made it available immediately. Or bought it with a tenant.

Trying to learn these very complex issues by asking online is not going to work, sorry.

  • Michael Plaks
  • Loading replies...