Real Estate Professional Status

[Brian Moran]

I have watched multiple videos on REP status, and listened to the BP & Short-Term Shop podcasts on the subject.  I have also downloaded and reviewed the Passive Activity Loss, Audit Technique Guide (ATG), produced by the IRS. 

Goal - Reach REP status if possible

Details - Married-Filing Jointly. Wife is a home-maker. We have purchased a 4-plex, and plan to purchase additional as we are able.  I have a very good W2 job, however, most months my hours are low, and I am seemingly "on-call" or "released" from duty.  

For instance - in December I only worked 49 hours at my W2, but was paid my full-salary.  This best-case month would average 600 hours a year.  A higher would be 80-100 hours, yearly average of 1000-1200 hours. 

I could never get 750 - 1201 hours a year in a single rental property and the ATG explicitly says a rental is mostly passive and doesn't require much time (although mine is keeping us busy for the time being.) 

I need something else to get me over 1200 hours/year.

The ATG mentions the following jobs as "real property business":

Development or redevelopment

Construction or reconstruction

Acquisition or conversion

Rental

Management or operation

Leasing

Brokerage

Opinions - Does a Realtor count, I would think yes. What about a Mortgage "broker"?

My thought process - Start a side-gig (Realtor or Mortgage Broker) to my side-gig (purchasing, updating, and managing my rental property(s)) in order to meet the majority test.

I think as a realtor I would be able to work 20 hours a week, and then with my less amount of work at my rental(s) log over 1200 hours a year. 

Has anyone executed this with a W2 that wasn't real estate?

What am I missing - none of the videos talk about something inbetween......Mixing the real estate investing with one of the above business's to claim REP status, and thus write-off any and all income, including their W2.