Real Estate Professional-Investment Tax Benefits

you can deduct almost every expense related to the rental property as well as depreciation and other things.

I have one friend whose rental property brings down he and his wife's overall effective tax rate to around 5%

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You better make damn sure you meet the qualifications to be considered a real estate professional.

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+1000

This cannot be stressed enough, if you claim this election, keep good records. If you claim it without qualifying, You're entering a world of pain. Let me say that again:








Here's a simple test:

1. Does a company engaged in a real estate activity in which you own 5% or more of the company currently employ you?

If the answer is yes, you are a Real Estate Professional.

If the answer is no, continue with 2.

2. Do you work outside of the home?

If the answer is no, then go to 4 below.

If the answer is yes, go to 3 below.

3. Do you spend more hours in real estate activities on an annual basis than you do in your other business?

If the answer is no, then you cannot qualify as a Real Estate Professional.

If you're married and file a joint return, have your spouse complete this portion of the questionnaire.

If the answer is yes, then go to 4 below.

4. Do you spend a minimum of 750 hours per year in real estate activities?

If you answered yes and have no other profession, you are a Real Estate Professional.

If you answered yes and passed the test of 3. above, you are a Real Estate Professional.

If you answered no, you cannot be a Real Estate Professional.