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Updated about 9 years ago on . Most recent reply presented by

User Stats

25
Posts
8
Votes
Adam Ramsey
  • Property Manager
  • Denver, CO
8
Votes |
25
Posts

Taxes - Real Estate Professional

Adam Ramsey
  • Property Manager
  • Denver, CO
Posted

I currently own a duplex and I live in one (with my brother renting from me) and have the 2nd unit rented out. I also am a licensed Real Estate Agent and work for a property management company.

I tried reading up on what a "Real Estate Professional" was for tax purposes but left unsure. I work in Real Estate full time. However, most of my time is as an W-2 employee of the Management Company. I get a base salary but then also receive non taxed commissions whenever I sign up a new owner for property management or rent a property. I also get non taxed commission when I sell a property (typically only 2-4 sales in a year). Approximately 60-70% of my income is from my W2 salary. I personally manage my rental separate from the company, which is not a lot of work most of the time. 

My question is, do I qualify as a "Real Estate Professional"? I'm not sure if being a normal W-2 employee counts towards this. 

Lastly, if I do, is it worth it, does it increase audit risk? I am mostly considering doing this to use losses from the rental property to cut back on my taxes from the non taxed commissions I receive. 

Thanks for any insight!

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