How Real Estate Can Give You BIG TIME Tax Savings!
Real Wealth Show: Real Estate Investing Podcast
Understanding Material Participation and Real Estate Professional Status
Material participation in real estate involves demonstrating at least 750 hours of time specifically in real estate activities, exceeding any other endeavors. Additionally, material participation in rental properties must meet several tests such as 500 hours, 100 hours more than others, or primarily dedicated time on the property. Real estate professional status is attained by dedicating substantial time to real estate activities. It is crucial to clarify that there is no distinction between the hours counted for material participation and real estate professional status; all hours contribute to both categories. Merely reaching 500 hours of material participation and filling the remaining hours with other tasks does not lead to real estate professional status. Being a real estate professional requires investing considerable time solely in real estate activities. Even though one might meet the real estate professional status criteria as a real estate agent, if rental properties are not actively managed, they will remain passive investments. Successful material participation involves managing rentals, which could involve self-management or overseeing with ample dedication, especially crucial when others are also involved in the management. This distinction underscores the importance of actively participating in rental property management to avoid them remaining passive investments despite achieving real estate professional status through other real estate activities.
Remember Everything You Learn from Podcasts
