Can Stay-at-Home Spouse Qualify for Real Estate Professional Status?

Question

Hi BP,

I have two rentals (both in-state, one local) and a primary residence. I’m a full-time W2 earner. My wife is a stay-at-home mom but handles leasing, tenant issues, repairs—basically runs the rentals.

We’re exploring if she can qualify for Real Estate Professional Status to offset my W2 income. Has anyone successfully done this? Any tips on tracking hours and proving material participation?

Appreciate any insight—thanks!

Jason Malabute · Answer

Yes, your wife can qualify for Real Estate Professional Status (REPS) if you file jointly—even though you’re the W-2 earner—since only one spouse needs to meet the REPS tests. She must spend over 750 hours and more than half of her working time materially participating in real estate activities. To prove this, she should keep a detailed time log of tasks (e.g., leasing, tenant management, repairs), with dates, hours, and supporting documentation like emails or receipts. This could allow you to use rental losses to offset your W-2 income.

Aaron Zimmerman · Answer

I would echo a lot of what@Julius Vincent said. I would add that it'd be easier to obtain real estate professional status with being a realtor or another trade that isn't just managing rental properties.

As it stands now, it'd be a bit difficult for your wife to obtain 750 hours in managing two properties. If you add in being a realtor to the mix and make it a business, put in the requisite time, then all you'd need to do is materially participate in your rentals (which is a much lower bar than working 750 hours).

Josh Lewer · Answer

Agreed with what’s been said here, especially by @Michael Plaks. The 750 hour requirement is a high bar; it’s essentially a part time job, which can be tough to meet with just two properties (also high audit area and need meticulous records).

Also worth highlighting: time spent by others (like property managers) doesn’t count toward your hours unless it’s under your direct supervision and incidental to your own efforts (per IRS regs). That makes it a bit of a double edged sword.

At some point, you have to ask: Are you building a truly passive investment, or chasing tax breaks for the sake of tax breaks if your wife needs to be active in it. Definitely worth talking to a tax expert (many here on BP). Good question.

Basit Siddiqi · Answer

There are two requirements to qualify for real estate professional status.1) Spent 750 hours on real estate related activities.2) Spend more time on real estate than other activities such as a W-2 job or a business.Since she is a stay at home mom, she doesn't have to worry about the second requirement which is harder.She will need to have a log for the 750 hours along spent on real estate.

Vidyadhar R. · Answer

Thanks for all the answers. I'm definitely looking to invest more but I'm looking to reduce my taxes and figure out how to qualify for REPS. Any referrals for tax professional/ strategist who are familiar with helping in this kind of scenario would be much appreciated. Thanks.

Basit Siddiqi · Answer

I recommend @Michael Plaks

Michael Plaks · Answer

It's a bit ironic that you ask for recommendation on tax professionals when FOUR of us have already responded to you on this thread. And this forum features another dozen of our colleagues to choose from if the four of us is not enough. :)Here is more on finding a CPA: https://www.biggerpockets.com/forums/51/topics/1222774-expla...

Julius Vincent · Answer

Hey @Vidyadhar R. - Yes, your wife can potentially qualify for REPS status, even if you're the full-time W-2 earner. The IRS allows spouses to aggregate hours when filing jointly, and only one spouse needs to meet the REPS requirements. To qualify, she’d need to meet both of these tests:

1.More than 750 hours of real estate services in the year (leasing, managing, repairs, etc.)

2. More time spent on real estate activities than any other trade or business (which usually isn’t an issue for a stay-at-home spouse)

Then for LTRs (the rules for STRs are different) to be treated as non-passive and allow you to deduct losses against your W-2 income, she must also materially participate. That typically means:

- 500+ hours in the activity, or

- Doing “substantially all” of the work, or

- 100+ hours and more than anyone else involved

If your rentals are STRs, then it's a little different. STRs aren't considered rental real estate under IRS rules if the average stay is 7 days or less, so all your wife would need to do is materially participate in the STR in order for the losses to offset your W-2 income. No need to qualify as a REPS for STRs.

Toggl is good as a time tracker.

Can Stay-at-Home Spouse Qualify for Real Estate Professional Status?

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