Do you qualify for Real Estate Professional Status (REPS)?

[Lawrence Courtien]

Real Estate Professional Status (REPS) is one of the most powerful tax strategies available to real estate investors. It allows taxpayers to convert what would normally be passive rental losses into non-passive losses, which can offset W-2 or business income. But qualifying isn’t simple, and most confusion comes from misunderstanding where the rules actually come from. This guide breaks down the three layers that govern REPS: The tax code (IRC §469(c)(7)) The Treasury Regulations (§1.469-9 and §1.469-5T) The IRS audit manual (IRM 4.10.13.2.11 & 4.10.13.2.11.6)

[Bryan Martin]

Quote from @Lawrence Courtien:

Real Estate Professional Status (REPS) is one of the most powerful tax strategies available to real estate investors. It allows taxpayers to convert what would normally be passive rental losses into non-passive losses, which can offset W-2 or business income. But qualifying isn’t simple, and most confusion comes from misunderstanding where the rules actually come from. This guide breaks down the three layers that govern REPS: The tax code (IRC §469(c)(7)) The Treasury Regulations (§1.469-9 and §1.469-5T) The IRS audit manual (IRM 4.10.13.2.11 & 4.10.13.2.11.6)

REPS is very hard (not impossible though) for many people to meet.  It truly pretty much needs to be your only job as even another part time job with 15-20 hours per week makes it so you’re very close to the limit and run the risk of getting hours thrown out by the IRS if ever audited.  If going for it, just make sure your hours log is air tight.