How to put 750 hours to qualify as real estate pro for tax

[Amy Hu]

My husband is working full time. I'm housewife taking care of our child and rental properties.

We have 5 SFR and one apartment building out of state, managed by PM. We bought the apartment building vacant last year and since then put a lot of money in it for rehab. last year we had $78k passive loss. Our AGI is over 150k.

I put a lot of time managing the rehab. Also I'm planning to partner up with friends to acquire more rental properties. 

But what counts into that 750 hours? It seems that researching for properties doesn't count. What about time spent seeking investor as syndication sponsor? time spent selling property?

Will it help if I get real estate license and practice as agent in my state? thanks

[Steven Hamilton II]

Originally posted by @Amy Hu:

My husband is working full time. I'm housewife taking care of our child and rental properties.

We have 5 SFR and one apartment building out of state, managed by PM. We bought the apartment building vacant last year and since then put a lot of money in it for rehab. last year we had $78k passive loss. Our AGI is over 150k.

I put a lot of time managing the rehab. Also I'm planning to partner up with friends to acquire more rental properties. 

But what counts into that 750 hours? It seems that researching for properties doesn't count. What about time spent seeking investor as syndication sponsor? time spent selling property?

Will it help if I get real estate license and practice as agent in my state? thanks

 If you bought it vacant, then many of the expenses may have in fact been acquisition costs to be added to basis or depreciated separately. 100% bonus depreciation was available on certain improvements or items PURCHASED AND PLACED IN SERVICE after 9/27/17.

The 750 have to be in Development or redevelopment, Construction or reconstruction, acquisition or conversion, rental, management or operation, leasing, brokerage. You have to spend more than 50% of your time in in the real property business and spend at least 750 hours in real estate. 

Many do not qualify and having a PM does not help your case.

You may want to read up on IRC 469 and review the IRS's Audit Technique guide. https://www.irs.gov/pub/irs-mssp/pal.pdf