Real Estate Professional Status And Material Participation Support
Expert tax planning and advisory services from AE Tax Advisors.
AE Tax Advisors provides comprehensive real estate professional status and material participation support services for business owners and practice owners. Our approach combines deep technical knowledge of the Internal Revenue Code with practical, real-world application.
How We Help
Every engagement begins with a thorough analysis of your current situation. We identify opportunities, design strategies, and work with you year-round to implement and monitor your plan.
Who This Is For
This service is designed for individuals and businesses earning $500,000 or more annually who want to take a proactive approach to tax planning.
Frequently Asked Questions
What are the requirements for real estate professional status?
Two tests must be met in the same year under IRC Section 469(c)(7): more than half of all personal services performed in all trades or businesses must be in real property trades or businesses in which you materially participate, and you must perform more than 750 hours in those businesses.
What are the seven material participation tests?
The seven alternatives cover more than 500 hours; substantially all participation; more than 100 hours and at least as much as every other individual; significant-participation activities combined above 500 hours; participation in five of the preceding ten years; qualifying personal-service activity participation in three prior years; and a facts-and-circumstances test. Additional conditions and restrictions apply. The more-than-100-hours individual comparison is Test 3, not Test 4.
Can spouses combine hours for material participation or REPS?
Spousal participation counts for material participation even without ownership or a joint return. REPS qualification is different: one spouse must independently meet both the more-than-750-hours and more-than-half-of-personal-services requirements. Combining spouses' hours cannot establish those REPS thresholds.
Do I need an aggregation election?
Not automatically. A qualifying real estate professional generally treats each rental real estate interest separately unless a valid election treats all interests as one activity. Evaluate participation, prior elections and future dispositions before electing. Short-term rental activity grouping has a separate analysis; owning several properties does not itself establish a valid group.