Real Estate Professional Status & Taking Losses Against Full Time Income

[Isaiah Tademy]

Hello BP Community,

I'm a bit stumped. I've talked to several investors and my CPA and am getting different answers. I am a full time insurance agent with a relatively high income, and my wife got her real estate license this year (intending to qualify for real estate professional status). We aquired a handful of rental properties this year (in my personal name), and my wife handles all property management with our units and has generated some real estate commissions from sales. 

My question: Can we still take advantage of cost segs/depreciation losses against my insurance income because we are married (even though my name is on the properties only?) Or does my wife need to own the properties in order to take losses against my income?

Would love some guidance from those in a similar situation or tax professionals :)

[Melissa Nash]

I am not a CPA- but I have professional real estate status and it is something that you "self-vet" yourself. You don't need to be a realtor, anyone can get this Tax status and like

Kislay Shah said, the requirements are spelled out. You don't apply for it, it is basically you saying, yes - I fit this and then if you get audited the IRS will ask you for proof. So just track hours and time and you are fine, track every little thing she does from driving, calls, texts, reading, I mean everything just track. 

I have a client that is professional real estate status she did not do a cost seg yet and got $144k last year as a tax deduction on her properties, bc she is prof real estate status that got carried to her combined taxes with her high earning spouse and LOWERED their tax bracket and taxes owed. 

I personally have done cost segs and got HUGE HUGE tax benefits and took it all out so that I paid Zero federal taxes last year while my portfolio grew to over $4mil. So if you can get those hours its the gold mine for tax breaks!  

Best of luck