Real Estate Professional and Material Participation

[Bruce D. Kowal]

An easier way to remember.

You know, this whole topic suffers from way too many syllables and a logic that always has to be relearned.

“Material Participation”. Good Grief! That is nine syllables and it doesn’t exactly fly off the fingertips when typing, or the tip of the tongue.

How about we call it MATPART? It’s dreadful I know. For those in taxation there is SRLY. Pronounced “Surly”. “Single Return Limitation Year”. Just sayin’

And Real Estate Professional, why not just REP. Simple.

Where am I going with this? An easier mnemonic. Really!

Think of REP as the Learner’s Permit. You know, to drive a car,

And MATPART as the Road Test.

And you need to qualify for the Leaner’s Permit each year. And take the Road Test each year.

That’s it.

Learner’s Permit. The two-part test. Be in the business for at least 750 hours. And all that stuff about being a > 5% owner etc. Learner’s Permit. Got it?

Now, the Road Test. The 500 hour MATPART.

Of course there are nuances.

But at least you can focus:

Each and every year you need to get the Learners Permit, and then you can get in the car and pass the Road Test.

Each year. Annually.

Learner’s Permit, Road Test

Real Estate Professional, Material Participation.

REP, MATPART

Which one sticks? Because there are Tax Court cases that involve Pro Se Taxpayers who claim that they have a Real Estate license and this is enough. NOT.