Spending more than 750 hours in real estate alone is not sufficient to qualify as a real estate professional. You need to pass all the following four tests.
In TurboTax, you need to check both boxes saying that you spend more than 750 hours a year actively involved in real estate and that you spent more than 50% of your work-related time involved in real estate.
You are a real estate professional if all of the following are true:
- You materially participated in a real property trade or business.
- More than half of your time is involved in real estate activities during the year.
- You materially participated for more than 750 hours in this business.
- You materially participated in each rental real estate activity.
As a real estate professional, you can deduct losses from real estate activities against your ordinary income. This can potentially help reduce your overall tax liability.
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