Do You Automatically Qualify for REPS If You're an Employee in a Real Estate Business

[Johan Garcia]

This question has come up a few times with prospective clients recently, so I thought I'd shed some light on it.

Generally, being an employee in a real estate business does not automatically qualify you for REPS unless you own at least 5% of the employer. If you're a 5% owner for only part of the tax year, then only the services performed during that period count toward qualifying.

Also, it's important to note that the Tax Court has held that merely being on calls doesn't meet the 750-hour requirement. The IRS and underlying regulations require that you actually perform services to count toward these hours.

Have a great Sunday!