Disability and Real Estate Professional Tax Filing- red flag?

[Account Closed]

We acquired two vacation rental this year and hired a property manager.

My husband is on long term disability, but he has done substantial work to acquire and set up the rentals. The work is all behind the phone and internet. Nothing physical. He easily meets the qualifications for “Real Estate Professional”.

We have rental expenses well over 25K and my w2 income is over the threshold.

Can we file this status if he meets the requirements, yet collects disability?

Before he became disabled, he did not work in real estate industry and does not have any credentials in this field either.

We are located in the SF Bay Area and looking for a real estate CPA and/or welcome any advice that can help us!

[Basit Siddiqi]

@Account Closed

"vacation rental" is this a property that you live in for part of the year. or is this a property that you use for short-term rentals?

Are these two properties the only 2 properties that you own?

You are required to spend 750 hours doing activities that are real estate related.

While it is possible, it is hard to imagine that there was 375 hours spent on 1 property in 1 year. Especially if there is a property manager in place.

Real estate professional status is also not something that you decide to claim at the end of the year. It is something that you should track the details/progress throughout the year.
The IRS may require a log of the hours spent in the case of an audit.