REPS qualification questions

[Megan Stone]

Im trying to breakdown some minor details of what exactly qualifies for REPS hours. I've received mixed answers

1) 500 hour material participation-

-- Does travel to and from the property count? We live out of state and have spent many hours travelling for this reason? - I learned in a real estate tax course that these hours do count. 

--  Due diligence, negotiating, obtaining finanicing of a property that we end up purchasing? 

2) 750 hr: (assuming we have met teh 500 hrs above, what counts for the 250 remaining hours?)

- Once again-- does travel count for this category (if it doesnt count for the 500 hr rule in #1)

- Does real estate education, meet-ups, analysis of potential deals, networking, count -- White coat investor article says NO, however I took a course on taxes/real estate and they clearly say yes, these activites count.

thank you for any insight

[Michael Plaks]

@Megan Stone

These are not "minor details", these are controversial areas coupled with major misunderstanding. You cannot learn it from an online forum, sorry. And I actually disagree with some of the comments posted on this thread.

Step 1 - you need to have qualified real estate activities first. You probably don't have them if you don't have any properties yet.

Step 2 - you need to pass the material participation test on each of these activities or, if you're allowed to combine them, on one combined activity. 500 hrs is one of the 7 ways to pass this test.

Step 3 - you need to have 750 qualified hours on all of these activities combined. 

This was only scratching the surface of the highly complex rules involved. So complex, in fact, that even the Tax Court got them wrong on more than one occasion. Not to mention various tax courses and my fellow tax practitioners.

Travel hours and education hours are highly controversial, with court cases going both ways. I recommend that you include them but DO NOT rely on them in order to pass the 750 hrs threshold.

I would not recommend navigating it without guidance of an accountant specializing in real estate.