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 high-income professionals and business 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?
Treasury Regulation 1.469-5T provides seven: more than 500 hours; substantially all participation; more than 100 hours with no one participating more; significant participation activities totaling more than 500 hours; material participation in five of the last ten years; a personal service activity with three prior years; and a facts-and-circumstances test.
Can spouses combine hours to qualify?
No. The qualification tests apply to each spouse individually and cannot be combined, even on a joint return. One spouse must satisfy both tests alone. Once one spouse qualifies, spousal participation may then be combined when testing material participation in the rental activities.
Do I need an aggregation election?
If you own more than one or two rentals, almost certainly. Without the election under Reg. 1.469-9(g), you must materially participate in each property separately, which is rarely achievable. The election groups all rental interests into a single activity so hours aggregate.