Tax Deductions for Active Investor but not RE Professional
Hi,
I had couple of questions about tax deductions, and their calculations for my case. I stay in California. I am pretty sure my understanding on the topic is on shaky grounds, and would appreciate if the tax pros chime in with their opinion.
Me and my wife are employed full time with big corporations and have a triplex about 3 hours away. The triplex is held in a trust with all our assets and is managed by a property manager. On a typical year, our real estate incomes is between $2000-2500, after deducting depreciation and the travel costs to check out the property 2-3 times a year. So far it has been pretty straightforward.
Over the next 6-9 months, I am planning to get a RE license, and start actively visiting properties, talking to property managers, visiting courthouse auctions, researching properties online that are 1-2 hours drive away from me. There is a good chance my time spent on these activities will exceed 750 hours/year, but still be less than time spent on my primary job. I am assuming in this case, I do not quality as a real estate professional for tax purposes.
Will I be able to deduct the cost of RE license, travel to view properties, and other RE costs like title search, RE attorney consultation even if I dont end up buying a property. It is a legitimate RE expense, but not on any specific property. Or is it not tax deductible for me since I am not a real estate professional.