Are You a Full-Time Real Estate Investor? Maybe not.

by | BiggerPockets.com

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?

About Author

Joshua Dorkin

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and Inc.com.

3 Comments

  1. 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.

  2. 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?

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