Navigating Real Estate Professional Rules: A Guide for Taxpayers

Real estate professionals may be eligible for certain tax deductions and benefits, but navigating the rules can be challenging. Here’s what you need to know to ensure compliance.

What is a Real Estate Professional?

A real estate professional is someone who spends more than half of their working time in real estate trades or businesses, and more than 750 hours per year in those activities.

Tax Benefits for Real Estate Professionals

Real estate professionals may be able to deduct rental losses against nonpassive income, as well as take advantage of the $25,000 special allowance for rental real estate activities. However, meeting the requirements can be difficult.

Meeting the Requirements

To qualify as a real estate professional and claim the associated tax benefits, you must meet both the time and material participation tests. This can be challenging, and it’s important to keep accurate records to support your claim.

Working with a Tax Professional

Navigating the real estate professional rules can be complex and confusing, so it’s recommended that you work with a qualified tax professional who can help you understand the requirements and ensure compliance.


Real estate professionals may be eligible for significant tax benefits, but meeting the requirements can be challenging. By understanding the rules and working with a tax professional, you can ensure that you’re taking advantage of all available deductions and benefits while remaining in compliance with tax laws.

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