Me big W2, spouse RE pro. How write off 1/3 LLC losses?
Sorry for the Tarzan title, but I think it covers the bases.
So I’m a W2 wage earner in the 33% tax bracket and my wife, who has no income, logged 750 hours on our rental house last year to qualify as a real estate professional. She’ll do the same again this year.
We as a couple joined two other couples on a real estate purchase and wrote an LLC operating agreement that assigns 6 members each with 1/6 interest (1/3 to the couple).
What does my wife need to do to qualify both as a real estate professional and as a material participant in the LLC, such that we can write off (1/3) LLC losses against my larger W2 income?
Does she qualify if...
If she logs more hours than anybody else in the LLC as property manager, even if the total hours are below 500.
If she logs more than 500 hours in the LLC but someone else still logs more hours than her, such as the contractor partner who is putting in hours in renovating?
Thanks for your help! I’ll send it to my CPA...he’s just a bit overwhelmed with tax season and I don’t want to bother him with it now.