Real Estate Professional

[S T]

For Schedule E and losses - isn't meeting the requirements of "Real Etate Professional" very difficult to meet?

Can a t/p just owning rental properties - say 4 properties - meet the "Real Estate Professional" so that losses are released as non-passive???

From TTB 7-13 - the taxpayer has to beet both of the following

1) More than half of the personal services the taxpayer performed
in all trades or businesses during the tax year were
performed in real property trades or businesses in which the
taxpayer materially participated, and
2) The taxpayer performed more than 750 hours of services during
the tax year in real property trades or businesses in which
the taxpayer materially participated.

Guess I am questioning the 1/2 personal service and the 750 hours - is it really possible for a taxpayer of 4 personal residential rentals? For this example there is no Real Estate License or Real Estate Broker License - just your normal taxpayer owning some rental properties.

This question is as a result of a either combining a MFS return to a MFJ return. I do not prepare the spouse's return, but submitted docs to that preparer - and the difference is huge, and it has been verbalized that there is a $60,000 loss on Rental Investments. I can only surmise (until such time as I am privileged to see "draft copies" that the other preparer is utilizing the "Real Estate Professional" on the Sched E.

Otherwise the income level is toooooo high to obtain the the $ 25,000 Special Allowance for Rental Activities on Sched E.

Probably posting before I have all the facts and a copy of a draft in hand - just trying to get my brain in gear

Thanks if anyone can point out what to look for.

Sandy

[Gretel]

I have a client who owns a number of rental properties - all together several hundred units to rent spread over about 10 rentals. I do his bookkeeping only but work closely together with the CPA who qualified him as real estate professional. He meets both tests, but be aware that the 750 hours applies to each rental property separately.

The only way to meet the 750 hours requirement is to aggregate the rentals, which has other consequences down the road, if taxpayer decides to sell one property.

[Burke]

It can be met if he does not work a full-time job elsewhere. Otherwise, it can be difficult. He does not have to have a real estate license or broker's license to be classified a real estate professional.