Welcome to Real Estate Tax Season!
In an article in the Wall Street Journal, Real-Estate Professionals Say IRS Snares Them by Mistake, we learn that the IRS is watching . . .
Given all the real estate investors and speculators who appeared during the fast fading real estate bubble-boom, the IRS has decided to look closer at real estate professionals. full-time real-estate professionals, defined as someone who spends more than half of his working hours in real estate and more than 750 hours a year tending to real-estate activities, can fully deduct losses — including depreciation, interest expense on loans and property taxes.
But those who don’t fit into that category are typically considered to be “passive” real-estate investors with a limited ability to deduct their losses, says Alan Weiner, a CPA and tax partner at the firm of Holtz Rubenstein Reminick LLP in Melville, N.Y.
Are you a full-time real estate professional?
Article Author:
Joshua DorkinJoshua has written 539 articles for us.
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BiggerPockets.com was founded by Joshua Reed Dorkin in August 2004. An entrepreneur, web designer, real estate investor, and one-time realtor, Joshua was not satisfied by the online offerings of other real estate sites out there, and decided to build one himself. Mr. Dorkin's vision for BiggerPockets has helped to propel it into becoming one of the top real estate destinations online. His vision for the site and its future has brought national press attention to both Mr. Dorkin and to BiggerPockets.
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Great post, A lot of investors really need to look into this so they may take all of their deductions. This will also keep the IRS off your back if you are a full-time real estate investor.
Josh, I need clarification on this. Somewhere I HEARD (that doesn’t mean what I heard is what the expert said!) that to be able to make the deductions, one must be a full time real estate professional AND work on your investment properties 750 hours a year. Is that the correct interpretation of your paragraph above or does it mean work 750 hours in any aspect of real estate?
hump! IRS
As long as I spend more time on my portfolio than my taxes I’m happy.
Thanks for the post.