Which jobs have the potential to qualify me as a Real Estate Professional?

[Melanie Baldridge]

Here’s the answer:

To qualify as a Real Estate Professional (RE Pro) in 2024, you need to meet certain criteria set forth by the IRS.

Here are some of the key requirements:

1. Material Participation in a Real Estate Trade or Business.

This is pretty straightforward but you must materially participate in a real property trade or business, such as development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage.

2. Time Requirement.

You must spend more than 750 hours in real estate activities during the tax year.

And you must spend more than half of your personal service hours in real estate activities.

3. Joint Filing Considerations.

If you are married and file a joint tax return, either spouse can qualify as a real estate professional. However, hours cannot be combined between spouses to meet the 750-hour requirement.

4. Aggregation Election.

You can elect to aggregate all of your real estate activities into a single activity for purposes of meeting the material participation requirements. This election must be filed with your tax return.

5. Proof of Services.

Be prepared to provide proof of the services performed and hours worked, especially if the IRS requests this information during an audit.

6. Exclusions.

Certain work, such as time spent as an investor reviewing financial statements or participating in management decisions without active involvement, may not count towards the 750-hour requirement.

As always, talk to your CPA to make sure that you meet the criteria above.

If you do, there are many helpful benefits to you.