Real Estate Professional Status (REPS)
A federal tax status under IRC Section 469(c)(7) that, when properly qualified, allows rental real estate losses to offset ordinary income with no passive activity loss limitation.
Detailed Explanation
A real estate professional must spend more than half of their personal services time in real property trades or businesses AND more than 750 hours per year in those activities. They must also materially participate in each rental property (or make a grouping election to aggregate). Married couples can have one spouse qualify. Without REPS, rental losses are passive and capped at $25,000 per year, fully phased out above $150,000 AGI. Documentation through contemporaneous time logs is essential because the IRS audits REPS claims aggressively.
Related TS CPA Service
Year-round, proactive tax planning that puts more money back in your pocket, not the IRS's.
Learn about Tax Planning & StrategyRelated Terms
Material Participation
The IRS standard for involvement in a trade or business that distinguishes active income (no passive loss limitation) from passive income (subject to PAL rules).
Cost Segregation Study
An engineering-based analysis that reclassifies portions of a building into shorter-life property categories to accelerate depreciation deductions in the early years of ownership.
Depreciation
The deduction of the cost of a tangible business asset over its useful life, reflecting wear, tear, or obsolescence.
Schedule E (Supplemental Income and Loss)
The federal tax form for reporting rental real estate income, royalties, and pass-through income from partnerships, S corporations, estates, and trusts.
Have a Question About Real Estate Professional Status (REPS)?
Get a free, no-obligation answer from a licensed CPA. We respond the same day.
Get Your Free Quote