IRS view of taxpayer intent.

[DL Martin]

Sorry for the clumsy thread title.

I have searched the forums here but still do not have a clear idea of what makes someone a "Real Estate Investor" vs. "Real Estate Professional."

In the interest of brevity, I will just state my situation and hope that Steven Hamilton II will give me one sentence that clarifies it for me...

This Fall I will be retired from my government job and will obtain an Ohio RE license for the sole purpose of "buying and holding" SFR and small apartment buildings. (and maybe two "flips" per year).

Does the IRS look at the mere possession of a RE license (and the tax expenses claimed on the tax return) and say "this guy is a real estate professional" and require that I pay self employment Social Security tax?

Or will the IRS say, "This guy gets a government pension that is more than double the median income in the state that he resides, he has never paid into Social Security, and will never receive social security, therefore we will not require him to pay self employment social security tax." ???

Does the IRS view the "use" of the RE license as the determining factor? If you only use it to buy as opposed to using it to buy and sell, does that make a difference? What if you never collect a commission and never represent another person? Does that factor into the decision?

Thanks,

DL