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Real Estate Investment News & Blog

About the Author...

About the Author...

Diane Kennedy, CPA helps real estate owners legally pay less tax. She’s the New York Times best-selling author of “Loopholes of the Rich”, “Real Estate Loopholes”, and 7 other best-selling financial and tax books. She’s also a business owner and real estate investor. Her motto is “It’s Your Money. Keep More of It.”

Learn more about Diane by visiting USTaxAid

IRS Challenges to the Real Estate Professional Status

The IRS has been stepping up their audits of anyone who takes a real estate loss on their tax returns. Some of their arguments against the taxpayers are valid and a lot of them are not.

Here are some of the recent challenges to the real estate professional status by the IRS and what you can do about it.

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3 Tricks to Winning the Material Participation Test

According to the material participation rules, you must spend 500 hours or more in activity with your property. You and your spouse can combine your hours.

The IRS is going to challenge what they consider “investor” activities with the property. Specifically, if all you do is read financial statements and look things up on the Internet, they will disallow those hours. They want to see you active.

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How to Safely Take the Real Estate Professional Tax Deduction

One of the hottest real estate tax strategies is the Real Estate Professional. The IRS is on to this one, though, so make sure you follow the rules.

If your income is over $150,000, you can not take advantage of your real estate passive losses unless you are a “Real Estate Professional.” If you want to get the tax advantage, though, you’re going to want to be a Real Estate Professional….

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What Type of Real Estate Investor Does the IRS Think You Are?

Real estate tax can be tricky. One of the first challenges is determining what kind of definition the IRS gives you. There are five terms you need to know.

You could be one or all five. You could have one property that qualifies you under one definition and another property that qualifies you as another. Let’s look at these in more detail….

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Turn Real Estate Investing Losses Into Cash

The best of all worlds is when real estate creates a cash flow and you don’t have to pay any tax on the money. Not only that, there is a paper loss created that you can use to offset other income. And by the way, the asset that creates all these things is going up in value.

That’s why we love real estate….

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