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Real Estate Professional-Investment Tax Benefits
Posted on 5/31/13 at 7:50 am
Posted on 5/31/13 at 7:50 am
Could someone who is a Real Estate Professional and a real estate investor please explain how advantageous the tax benefits are-specifically in offsetting W-2 income? Thanks in advance.
Posted on 5/31/13 at 7:57 am to Trophy Husband
More specifically, what kind of real estate investment? Rental properties or what?
Posted on 5/31/13 at 7:59 am to Trophy Husband
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%
I have one friend whose rental property brings down he and his wife's overall effective tax rate to around 5%
Posted on 5/31/13 at 8:08 am to Trophy Husband
The real estate professional designation is an election made on the tax return. The election allows you to deduct more than the 25,000 passive loss limitation.
You better make damn sure you meet the qualifications to be considered a real estate professional.
You better make damn sure you meet the qualifications to be considered a real estate professional.
Posted on 5/31/13 at 8:40 am to SippyCup
quote:
You better make damn sure you meet the qualifications to be considered a real estate professional.
+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.
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