Do You File Taxes As Real Estate Professional Or Not?
Is it best to file taxes as a real estate professional or not? I only invest in real estate and rehab properties. i flip some and i hold a few for rental income. I usually pay to get them done & the lady who did them has moved & retired. this year i brought turbo tax and the first question is are you a Real Estate Pro or not? i have do them both ways (yes & NO) both give me different Calculations and a different bottom line...HELP!!!!
Read Up...
A Real Estate Professional is a Realtor. They have to use a Sch. C as a Realtor.
The rest of us are NOT Real Estate Professionals, so we are limited to the 25K maximum loss per year. (carry forward allowed).
I do not rehab and flip. I have messed with that tax mess and I hate it. I am pretty sure that you are in business (Sch C) if you flip, short term capital gains.
If you rehab and rent, you carry all of those rehab costs toward your cost basis, depreciation, few deductions on Sch E ... depends on many particulars.
Read, Read... Hope this begins your research...
What do you do for your day job? Sounds like your real estate investing is a part time activity, or, am I reading too much between the lines?
I only invest in real estate. I stopped workin a day job 2 years ago. have 3 rentals. does that have anything 2 do with filing as a R.E. Pro.?
I value your tax knowledge and ability to explain, Kid.
I, too, only manage and invest in R.E; full time. Are there special rules that I do not know about for that? What/where to read for those rules?
Thanks alot NEWKIDINTOWN. thats the part i was having trouble with.
I keep reading the qualifications and i can answer yes to being a real estate pro, but i am always confused on why they dont just say Realtor or real estate agent if thats all it applies to.
I do all of the foot work when it comes to my properties. also i am a lisenced contractor and handle alot of that work also. definately put in well over1000 hours. . . just wanna be sure, after all nobody want an audit or any kind of tax trouble behind a simple yes or no answer mistake
wahid. There are a lot of us out there who are unlicensed by design. See my comments at http://www.thecreativeinvestor.com/modules.php?op=modload&name=Forum&file=viewtopic&topic=65435&forum=23
We are in the same boat... and are treated equally per IRS regulations.