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No, You Can’t Claim Real Estate Professional (REP) Status On Your Taxes
REP Status can save tons on taxes — which is why you most likely don’t qualify
As a CPA with a clientele heavily involved in real estate, one of the most common questions I get from potential clients is whether they qualify for Real Estate Professional (or REP) Status.
The answer I almost always give them is “no.” So they wander around until they find a tax accountant who doesn’t know what they’re talking about to allow them to take REP Status, as if that will somehow shield them from the IRS when it comes knocking.
(Hint: it won’t. Having a bad tax preparer is not a valid defense to the IRS)
Why So Many People Want Real Estate Professional Status
Before we dive into why you (likely) don’t qualify, let’s talk about why you want it.
If you purchase a rental property, you can potentially throw off huge tax losses if done right (topic for the future: cost seg studies).
Now, for most people, losses sound bad, but if you’re reading this, you probably already know what this means: a way to pay less in taxes this year WITHOUT real losses.
