Why Real Estate Professional Status Might Be the Most Overlooked Tax Strategy for Inv

[William Thompson]

If you’ve been in real estate for a while, you’ve probably heard people talk about Real Estate Professional Status (REPS)— but most investors still don’t fully understand what it means or how powerful it can be.

Here’s the simple version:

If you qualify for REPS, the IRS allows you to treat your rental income and losses as active instead of passive.
That means depreciation, cost segregation, and other real estate losses can actually offset your other income — even W-2 income.

For full-time investors or spouses who manage their properties, that can mean tens of thousands of dollars in tax savings every single year.

To qualify, you need to:
- Must materially participate in their rental activities.
- Spend over 750 hours a year in real estate activities.
- And more than half of your total working time must be in real estate.

It’s not for everyone — and you have to document it properly — but for serious investors, it’s one of the most valuable tax tools out there.

Most people think wealth in real estate comes from appreciation and cash flow…
But the biggest gains often come from how you use the tax code.

Curious — have you or your spouse ever tried to qualify for Real Estate Professional Status? If not, what’s holding you back?