Real Estate Professional Status

Real estate professional status under IRC Section 469(c)(7) allows qualifying taxpayers to treat rental real estate activities as non-passive, potentially enabling rental losses to offset ordinary income.

Qualification Requirements

To qualify as a real estate professional, both of the following tests must be met:

1. More Than Half Test:More than 50% of personal services performed during the tax year are in real property trades or businesses in which the taxpayer materially participates

2. 750-Hour Test:More than 750 hours of services are performed in real property trades or businesses in which the taxpayer materially participates

Real Property Trades or Businesses

Qualifying activities include:

• Real property development or redevelopment

• Construction or reconstruction

• Acquisition and conversion

• Rental, operation, and management

• Leasing and brokerage activities

Election to Aggregate

A qualifying real estate professional may elect to treat all rental real estate interests as a single activity for purposes of material participation, simplifying the hour tracking requirements across multiple properties.

Tax outcomes depend on facts and circumstances. This content is for educational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.