The Basics of “Real Estate Professional” Status for Tax Purposes
The Basics of “Real Estate Professional” Status for Tax Purposes:
One of the biggest challenges real estate investors face is keeping the profits that they earn from their investments. Just like any other business, the IRS is going to want to take as big a chunk of your profits as possible, and knowing how to use the system to your advantage will help you keep as much of your hard-earned investing cash as possible.
One of the best ways to limit the financial impact of taxes when it comes to real estate investing is to be able to claim “Real Estate Professional” status on your tax returns. If you can do this (and that’s a big IF), you have some hefty tax advantages you can leverage to keep more of your investment profit. That said, there is a lot of misinformation about what it means to be a “Real Estate Professional,” so hopefully I can cover the basics here.
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