qualified expenses

Who qualifies as a real estate professional for tax purposes?

Issue

Who qualifies as a real estate professional for tax purposes? More specifically, how does a taxpayer establish that he or she materially participate in rental activities, so that the rentals become non-passive, and any losses can be used without limitation?

Related Tax Rules and/or Regulations

Internal Revenue Code Section 469

Facts

Escalante earned income from teaching and his ownership of rental properties that he managed himself. His teaching contract required him to work a minimum of six hours per scheduled work day. As is customary with this type of contract, it contemplated that there would be a substantial number of hours spent outside the classroom engaging in tasks and activities like lesson planning, grading papers, parent-teacher consultations, and faculty meetings.

BACK TO SCHOOL EDUCATION CREDITS

If you or a loved one like a spouse or child is enrolling in college in the near future, remember that there are tax credits which may reduce your tax bill. Before reviewing these credits, it is important to note that you can claim only one type of education credit per student on your tax return each year. If more than one student qualifies for a credit in the same year, you can claim a different credit for each student.

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