Great tax loophole - Posted by Arif TX

Posted by Arif TX on March 04, 2002 at 17:30:55:

I have an appointment with another CPA next week. Hopefully he knows more than the other guy!

Great tax loophole - Posted by Arif TX

Posted by Arif TX on March 01, 2002 at 07:16:13:

Forgive me if this subject has already been discussed. The search engine is not working. I read on the main board that you can claim to be a “Real Estate Professional” and claim all of your losses for the year instead of carrying it over to the next. I ask this because I am in the process of acquiring 10 properties this year and I am sure I can reach the 750 hours required to get this tax status. Can someone go into more detail as to how this works?

Re: Great tax loophole - Posted by JHyre in Ohio

Posted by JHyre in Ohio on March 03, 2002 at 06:42:42:

Basically means that you spend more time on RE activities (all lumped together…management, investing, brokering, etc.) than other activities AND at least 750 hours on same activities. You also must MATERIALLY participate in the rental activity…generally not a problem if you spend 500+ hours on rentals AND elect to treat all of the rentals as ONE “activity” for passive loss purposes.

John Hyre

Re: Great tax loophole - Posted by Arif TX

Posted by Arif TX on March 04, 2002 at 07:16:00:

I went to visit a CPA on Saturday and he said the only way to be considered a Real Estate Professional is to be a RE agent, builder, rehabber, but that I wouldn’t be considered because I just purchase property. Does anyone know where I can find the part of the tax code that covers this topic?

Get a new CPA - Posted by JHyre in Ohio

Posted by JHyre in Ohio on March 04, 2002 at 10:24:20:

IRC Section 469©(7)© defines “real property trades or businesses” as “any real property development, redevelopment, construction, reconstruction, ACQUISITION, conversion, rental, operation, management, leasing, or brokerage trade or business”…the catch is to be active enough that you have a “trade or business”…if you materially participate or meet the 750 hour test, you ARE in a trade or business.

John Hyre