Real Estate Professional as a W2

[Felipe Manoloff]

Hi everyone,

I currently work full-time as a W2 employee, but I’ve been learning about the Real Estate Professional (REP) tax status and how it can benefit investors. From what I’ve read, you need 750 hours per year and more time in real estate than in your other job, which makes it difficult for someone like me with a full-time W2.

I recently heard that there may be a way to qualify by working part-time (15–20 hours a week) with someone who is already full-time in real estate, almost like apprenticing or assisting them. So I could both learn the business and work toward REP status.

Has anyone heard of this being possible? Would hours spent helping another real estate professional (e.g., property management, acquisitions, analysis, etc.) count toward the 750 hours? If so, who would I need to connect with to set this up—an attorney, CPA, broker, or someone else?

My long-term goal is to eventually qualify for REP on my own properties, but I’d love to know if this path is realistic.

Thanks in advance for any guidance!

[Aaron Zimmerman]

It is possible without a doubt but there's quite a few pitfalls.

1. Keeping a time log - this is your audit defense. Keep detailed records. Many investors don't. 

2. Understanding which hours count and which hours don't. Working with a cpa, you will want them to review your time log thoroughly. 

3. You have to have at least 5% equity in the business. Working a job within real estate (I.e. property manager) with 0% equity in the business does not qualify you. 

4. not materially participating in your rentals. You could work 750 hours and more than half your time in your main real estate business, but not materially participate in your rental properties and this whole strategy could be for not.

Lots of considerations with reps status and lots of pitfalls. You will definitely want to work with a real estate cpa that can guide you through.