The Real Estate taxation can be complicated. Good news is that Real Estate Professional Status (REPS) can serve as an assistant to solve this complication. It provides you with significant tax benefits that can strengthen your financial plan. Today, we'll go into the specifics of REPS and guide you on how to turn your tax obligations into growth prospects.
Understanding Real Estate Professional Status (REPS)
REPS is more than a job title; it's a strategic position recognized by the IRS. It enables eligible taxpayers to gain tax advantages by participating in certain real estate operations. Individuals with this status can handle their real estate investments and get tax breaks that they wouldn't be able to get without this status. This is especially helpful for couples where one partner makes a high income.
Who Is A Real Estate Professional?
There are three requirements set forth by the IRS for someone to be considered a "real estate professional."
1) You performed more than half of your services for the year in your real estate business.
2) You put in more than 750 hours of employment in real estate-related industries during the tax year in question.
3) You actively take part in these real estate endeavors.
These tests are applied annually. This implies that in some years, you could become a licensed real estate agent, while in other years, you might not. That's why the same real estate transaction can result in passive losses in some years and nonpassive losses in others.
Obtaining Real Estate Professional Status is beneficial to your financial plan from a tax perspective. Epsilon Accounting Solutions lends a hand whenever you need specialist accounting or tax preparation support for small businesses in Edmond, OK.
What Are The Benefits Of Getting REPS?
By qualifying as a real estate professional, you may transform non-active losses into active, tax-deductible losses. You can drastically reduce your tax burden through the use of REPS if you invest in rental property.
REPS's tax advantages are life-changing for high-income households. With the correct categorization, the paper losses created from items like accelerated depreciation might actually lower your taxable income. In the case of a couple making more than $150,000 a year, these losses would not be allowed without REPS. However, with REPS, they can be fully utilized, which could lead to a significant decrease in total tax payments.
How Epsilon Accounting Solutions Assists with REPS
Epsilon Accounting Solutions, PLLC, under the direction of the insightful Ahmed Baqir, CPA, focuses on helping its clients get the most out of REPS.
1) Personalised Consultation
Knowing your situation is essential. We take the time to learn about your specific financial circumstances so that we can assist you in developing a strategy to attain REPS.
2) Strategic Planning
To ensure you pass the 750-hour and over 50% examinations in real estate, we assist you in planning your activities with our extensive experience through CPA for real estate agents.
3) Meticulous Record-Keeping
Epsilon Accounting Solutions is aware that in order to be eligible for REPS, thorough record-keeping of all of your actual estate-related transactions is required. From choosing the correct properties to keeping meticulous records (crucial in the event of an IRS audit), our customers receive individualized assistance and support from Ahmed Baqir, CPA. In the event of an audit, our staff will help you be prepared by keeping all the records an auditor could need.
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Get Your Real Estate Professional Status
Now, are you prepared to get your Real Estate Professional Status? Don't hesitate to contact us and make an appointment with Ahmed Baqir, CPA, to learn how REPS might improve your finances. Let us assist you through the process, ensuring you receive every tax benefit you deserve while helping you keep focused on what matters most—your assets and financial future. Â
Disclaimer: This article does not constitute tax advice. Please consult Ahmed Baqir, CPA at Epsilon Accounting Solutions PLLC, before making any tax-related decisions or taking any actions based on the information provided in this article. Ahmed Baqir, CPA, has the expertise and knowledge to provide personalized advice tailored to your specific financial situation and goals.
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