There are significant tax benefits for investors who can qualify with the IRS for real estate professional status. This is a powerful tax planning tool, especially for investors with multiple rental properties, which can create thousands of dollars in tax deductions.

To qualify as a ‘Professional’ for tax purposes, a taxpayer, or their spouse, must meet a two-part test; the taxpayer must spend the majority of his or her time in real property businesses and the taxpayer must spend 750 hours or more in the real property business and rentals in which he or she materially participates.

There are drawbacks to incorporating the real estate professional status into your tax planning strategy which must be considered. Taxpayers who are classified as a real estate professional will have business income treated as ordinary income subject to self-employment tax. Establishing an S-Corporation is generally a necessary measure for an effective tax strategy incorporating the real estate professional status.

If you need real estate tax help in Charlotte, NC, Camuso CPA PLLC can help. We can provide a tax consultant for your real estate company that can potentially save you thousands.

For a detailed discussion on this topic, tune into my conversation with Darrin Gross on the Commercial Real Estate Podcast: