To be a real estate professional, a taxpayer must provide more than one-half of his or her total personal services in real property trades or businesses in which he or she materially participates and perform more than 750 hours of services during the tax year in real property trades or businesses.

Is a Realtor a real estate professional?

a Realtor, a real estate agent is a real estate professional with a valid license. Agents help people buy and sell both commercial and residential properties. Agents can also become Realtors, active and paying members of the National Association of Realtors (NAR).

Is a landlord a real estate professional?

This has now changed. Qualifying as a real estate professional will now benefit many landlords who earn profits from their rentals because, by doing so, they won’t have to pay the Net Investment Income tax (NII tax) on them. The Net Investment Income tax, enacted to help fund Obamacare, took effect on Jan. 1, 2013.

What’s the difference between real estate agent and Realtor?

Real Estate Agents. The word Realtor is a trademark referring to someone who’s an active member of the National Association of Realtors (NAR). In the United States, a real estate agent is licensed to help consumers buy and sell commercial or residential property.

What do you need to know about real estate professional status?

For high income investors, the real estate professional status is undoubtedly one of the most powerful tax tools. It can potentially help someone bring their tax bill from 35% down to 15%—or lower. To meet the real estate professional status requirements, you must work at least 750 hours during the tax year in a real estate trade or business.

What are the tax benefits of being a real estate professional?

To receive the tax benefits of being a real estate professional, you simply must meet the hour and participation requirements of the IRS. The person claiming real estate professional status must spend at least 750 hours participating in “real property trades”—or the real estate business, as defined by the IRS.

Can a real estate professional file an amended tax return?

The IRS released legislation that says for certain taxpayers, it may be possible to file an amended return for the real estate professional status. To claim real estate professional status on your tax return the right way, make sure to keep these items in mind:

How many hours do you have to work to be a real estate professional?

It can potentially help someone bring their tax bill from 35% down to 15%—or lower. To meet the real estate professional status requirements, you must work at least 750 hours during the tax year in a real estate trade or business.