Are you aware that there is a tax code that can potentially “0” your taxes?
If you are a real estate investor and working in a real estate business, you are in a unique position to take advantage of this powerful tax strategy that could potentially “0” your taxes. It’s called the “real estate professional” designation.
Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.
Under this law, if you are a real estate professional, you can fully deduct rental losses against your W-2, business income and other income without limitation. What does that mean? It means, if you understand the tax rules and apply it correctly, you can potentially “0” your taxes.
1. 50% test – You must spend more than half (51%) of your working hours in a real property trade or business like purchase, rental, management or sales.
2. 750-hour test – You must spend 751 hours in real property trade or business
3. You must be at least a 5% owner of real property trade or business
4. The 50% test and 750-hour test must be met by only one spouse in the case of married taxpayers
5. You must materially participate in the management operations of your own rental real estate. Married couples can combine their hours to meet the material participation hours.
To recap, a “real estate professional” designation is one of the most powerful tools that you can use in order to legally zero out your taxes! So make sure you understand the rules and keep good records.
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Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.com.