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Multiple Rental Properties / Part-time Real Estate professional / qualified real estate professional?
In a recent tax court decision (Roberta Birdsong, et ux. V Commissioner) the taxpayer sued because the IRS had disallowed the taxpayer’s rental loss.
There are several hoops to jump through before a taxpayer can be considered a qualified real estate professional. In this case, Mrs. Birdsong did not have any other employment, so the case hinged on whether Mrs. Birdsong spent 750 hours on rental activities. Thanks to having documents that supported her claim, the court ruled for the Birdsongs. They were able to take the rental losses.
Lesson: Detailed documentation is critical. Keep track of the actual hours you spend on your rental properties. While there are many ways to keep time records, there are several apps for smart phones that will do this for you.
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Jeanne Bergelin-Murphy | 09/28/2018