All Forum Posts by: Natalie Kolodij

1. Material Participation: To qualify as a real estate professional, you must meet the IRS's material participation requirements. This means you must be involved in the day-to-day management and operations of your rental properties. The CPA will likely inquire about your involvement in setting rents, approving repairs, and overseeing renovations.

2. Hourly Requirement: You mentioned that you easily meet the 750-hour requirement, which is essential for qualifying as a real estate professional. The CPA may ask for documentation to support the number of hours you spent on real estate activities, such as logs, calendars, or other records.

3. Recordkeeping: Having accurate and organized records is crucial when claiming real estate professional status. The CPA will review your records to ensure they are detailed and well-maintained.

4. Documentation of Services: The CPA may ask for evidence of the services you provided related to the properties. This could include emails, contracts, invoices, or any other documentation that shows your involvement in property management, renovations, repairs, and other related activities.

5. Comparing Hours to Other Activities: The CPA may inquire about your other sources of income, such as investments, pensions, and IRA withdrawals, to determine if real estate activities are your primary source of income.

6. Active Participation in Management: The CPA will want to ensure that you were actively involved in the management of the properties and not just a passive investor.

7. Planning for Deductions: If you qualify as a real estate professional, it could have significant tax implications. The CPA will likely discuss how this designation impacts your tax deductions and overall tax strategy.

8. Other Considerations: The CPA may explore any other relevant factors that contribute to your qualification as a real estate professional, such as the nature of your involvement in the properties and your intentions to continue this level of activity.

Be prepared to provide detailed information about your real estate activities, hours spent, and any other relevant documentation to support your qualification. The CPA's analysis will help determine if you meet the IRS requirements, and they can provide guidance on how to maximize tax benefits based on your real estate professional status.