The Real Estate Professional Status What Hours Counts For REPS? - Ryan Pulice
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Nov 14, 2023 In this engaging discussion, Ryan Pulice, a Virginia-based tax and accounting expert specializing in real estate tax planning, unpacks the intricacies of Real Estate Professional Status. He clarifies how construction activities can shape your status and the importance of material participation for tax benefits. The episode delves into the complexities of tracking qualifying hours, including travel time and meticulous record-keeping. Ryan also shares legal precedents and practical tips for navigating IRS guidelines, making this a must-listen for real estate professionals.
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Material Participation Applies Broadly
- Material participation rules apply to all businesses, not just real estate.
- Rental real estate is passively categorized by default, with real estate professional status being an exception.
Counting Construction Hours
- Construction hours count towards the 750-hour requirement if the intent is to rent the property.
- If the property is built for resale, the construction hours won't count towards material participation.
Material Participation Nuances
- 750 hours must be material participation hours, applicable to the specific rental activity.
- Real estate agent hours count towards 750 but not towards material participation in owned rentals.