Real Estate Professional Requirements - Posted by Anon

import · September 5, 2009, 9:38pm

Posted by John K Haslach, CPA on September 23, 2009 at 15:54:49:

These are IRS rules. In order to be able to fully deduct real estate losses you must be a real estate professional.

import · September 5, 2009, 9:38pm

Posted by Anon on September 05, 2009 at 21:38:57:

I have a question regarding the requirements to qualify as a real estate professional. I understand the two requirements: a) you need to spend the majority of your time in real estate activities, and b) you need to accumulate 750 total hours working in real estate. So my question is, would doing something like lonnie deals count towards “spending the majority of your time in real estate activities,” if you are also involved with other real estate activities (duplexes, single family homes, whatever)?

For example, let’s say your working hours for the year broke down like this:
1000 hours working at a non-real estate related job
900 hours working with duplexes, triplexes, and quadplexes (acquiring, managing, etc)
400 hours working with lonnie deals (with a mobile home retailer license)

Obviously you would pass the 750 hour requirement. But, would you pass the “spend the majority of your time in real estate activities” requirement? If the lonnie deals count towards “real estate activities,” you would…but if they don’t count, then you wouldn’t.

Any help? Thanks.

import · September 7, 2009, 11:35am

Whose requirements? - Posted by John Merchant

Posted by John Merchant on September 07, 2009 at 11:35:39:

Many of us participating on this site are truly RE pros but might or might not qualify under the rules you mention.

So please, whose rules and what is your definition of “RE Pro” you’re trying to qualify for?

If it’s some state’s RE Agent and Broker licensing agency or authority that you’re wanting to qualify for, then they’d be the ones to tell you how they interpret those rules and qualifying under them.

import · September 13, 2009, 8:05am

Re: Whose requirements? - Posted by Steve B

Posted by Steve B on September 13, 2009 at 08:05:58:

This is a tax question.

I have a similar situation and do not yet know the answer. I earn the majority of my income from my non-real estate job. Accordingly, my accountant classifies my wife and me as “passive” real estate investors and does not allow us to deduct real estate losses (depreciation, etc.) against our non-real estate income on our income tax return. We feel my wife, who handles the majority of our daily real estate activities greater than 750 hours a year, should qualify as a “real estate investor” for tax purposes, allowing us to take the deductions. This can make a big difference in one’s annual tax burden.

I am requesting a legal opinion on this and will share what I learn.

Good luck.

import · September 20, 2009, 12:19pm

Re: Whose requirements? - Posted by Len

Posted by Len on September 20, 2009 at 12:19:58:

Here is an article that is interesting and touches on the subject:

http://www.real-estate-online.com/articles/art-224.html

to offer one comment: There is more than just the 750 hour test per year, that you must meet. More than 50% of your time must be spent in real estate related endeavors.

I presume you are requesting a letter ruling(LTR) from IRS? If so, it will be interesting to see what IRS determines after examining the stated facts of your situation.

BTW, If you want to read more about the subject, do a Google search using the keywords – “real estate professional” and see what comes up. There should be a lot of opportunity to do some reading/research.

Good luck!