Can W-2 employee qualify for real estate professionals?

Question

Hi, if one already has a W-2 job, but at the same time has an LLC for rentals, can that personal still qualify for real estate professional?

Thank you!

Rereloluwa Fatunmbi · Answer

What if I have a W2 job I do about 7-8 hours (8am-3pm/4pm) a day. But I spend after work hours (5pm-12am) on real estate activities. And weekends (Sat-Sun to catch up on weeks I worked less on real estate). Can I qualify as a REP?

Natalie Kolodij · Answer

Only if youre >5% owner of the company. Having a w2 job that happens to be for someone in real estate doesn't qualify you.

Steven Hamilton II · Answer

Not if you work full time. You have to spend more time in real estate than in any other activity. And that time has to be at least 750 hours. You can qualify as a real estate professional even if you work full-time in another business. However,some businesses are better suited for this than others.According to the IRS, you qualify as a real estate professional for purposes of the passive loss rules if youmeet both of the following:

• You perform more than half of your personal services (think “work”) for the year in realproperty trades or businesses in which you materially participate.
• You perform more than 750 hours of services during the year in real property trades orbusinesses in which you materially participate.

Both prongs of the test require you to spend a great deal of time working in “real property trades orbusinesses.” What does that mean? According to the IRS, it can mean a profession in any of thefollowing:

• Development
• Redevelopment
• Construction or reconstruction
• Acquisition
• Conversion
• Rental
• Operation
• Management
• Leasing
• Brokerage
•

Michael Plaks · Answer

@Pauline Zhao

If you're married, and your non-W2 spouse qualifies

Sean O'Keefe · Answer

@Rereloluwa Fatunmbi Based on what you say, unlikely, but you can find more info on REPS from IRS here..*This post does not create a CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.

Joe A. · Answer

I understand that you're unlikely to qualify as a real estate professional if you have a full-time W2 job. What if your W2 job was something based in real estate though? Say a construction worker or property manager, for example.

Can W-2 employee qualify for real estate professionals?

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