Real estate professional criteria
Hi, I am very new to real estate investing. We have a had rental property for several years, but I want to take this to the next level. We have a major repair in our rental this year and I know that we are going to exceed the limit for allowable passive losses. I am curious of how everyone else does this. Do you classify yourself as a real estate professional for use in the given scenario: The IRS rules for claiming Real Estate Professional Status are very clear, and require that two key criteria be met in the given tax year:
- More than half of the professional hours worked throughout the year must have been devoted to material participation in real estate activities;
- More than 750 hours of material participation in real estate activities in the tax year being considered.
Or do you run it as a business as and use a schedule C? For the real estate professional status, currently I work approximately 40 hours every 2 weeks at my current job, so would I have to work at least 21 documented hours every 2 weeks to meet the first criteria? I apologize for being so ignorant, I just want to get started right as this is year zero. Thanks in advance for any advice!