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Real Estate Professional Qaulifications
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If you wish to claim Real Estate Professional Status allowing no limitation of IRC 469 passive losses you are required to meet two main requirements.
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1. The taxpayer must spend more than one-half of the personal services they perform in real estate trades or businesses in which they materially participate. Meaning if you work a full time job, you likely will not qualify.
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2. Hours spent in real estate related businesses or activities must total more than 750 during the tax year. Hours for taxpayer and spouse may not be combined, and are counted separately. Hours for rental property activities are only combined if an election is made to do so.
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How to Use this Time Tracker
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1. Start with the "Activity Key" Tab.
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On each line enter a separate activity. An address for each rental, "Agent" if you are a RE Agent, "Wholesale" if you worked a wholesale deal, The address of a Flip project, ect
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2. Utilize the Time Log Tab to track your RE related hours through the year
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~Click in the date box and enter "Ctrl +;" to enter the current date, or type in a prior date
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~Select who's time is being recorded from the Taxpayer/ Spouse drop down
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~Select which activity this time was reltaed to from the "Activity" column drop down
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~Type in details on what service/work was done - the more details the better
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Select a method you'd be able to utilize to verify this time if Audited
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General Notes
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Only activities on current RE Business qualify, time spent analyzing deals, or looking at potential properties DO NOT qualify toward the 750 hours.
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The format of this spreadsheet is designed to directly mimic the IRS Audit Guide related to Real Estate Professional. Completing the worksheet completely helps protect you if audited.
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Only if you're involved in daily operations may you count time for financial analysis as well. This includes reviewing financials, reconciling bank ect.
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The IRS requires on-going tracking related to tracking these hours. This log is designed to be completed on a fairly regular basis to track your time and protect you in an audit.
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Driving time related to real estate activities qualifies. Any time that is legitimate business driving and not commuting may be counted.
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Common qualifying tasks would include: Time spent as an agent, Time spent hiring and supervising contractors, Repairs you do on properties, property condition checks, drive time to get supplies, collecting rents, addressing tenant issues, responding to emails and phone calls, reviewing financial status of your properties, ordinary and necessary activities.
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