a Real Estate Professional, as defined by the IRS,
you may be deduct expenses over the standard limit of
THERE ARE SPECIFIC RULES TO
Following is a brief summary of these rules.
Full-time real estate
professionals may be able to deduct 100% of their rental
property tax losses from their income. That's not true for
people who spend less than full time as real estate
professionals or rental property owners. Details are
spelled out in the Internal Revenue Code 469(c)(7).
If you are a real estate agent
or broker, a landlord, a professional property manager, a
developer or are in the construction business, then the IRS
considers you to be a Real Estate Professional. SUBJECT
TO certain rules.
It is especially important for
the Real Estate Professional who materially participates in
the operations of rental real estate to be aware that ever
since 1994 they are no longer subject to the Passive Loss
1. More than half of the
taxpayer's personal services in all businesses must be in
real property businesses. A real property business is real
property development, construction, acquisition, conversion,
rental, management, leasing, or brokerage
2. The taxpayer must spend more than 750 hours a year in
real property trades or businesses.
NOTE: For time to be counted in either of the above two
tests, the taxpayer must materially participate in the
3. The taxpayer must materially participate in each rental
real estate activity unless he or she has filed an election
to group all rental real estate activities as one (for
purposes of materially participating).
It may be a good idea to get a
Real Estate License.