Real Estate Professional Status (REPS) Explained | 750-Hour Rule, Material Participation & IRS

If you’re a real estate investor looking to deduct rental losses against W-2 or active income, you’ve probably heard about Real Estate Professional Status (REPS) — but few people actually qualify the right way. In this video, Attorney Brian T. Boyd breaks down exactly how the IRS defines REPS under Section 469(c)(7), including the 750-hour rule, material participation, and what documentation you need to prove your status if audited. What you’ll learn: What Real Estate Professional Status is and how it changes passive loss rules The two REPS tests: More than 50% of your working hours must be in real estate trades or businesses You must spend at least 750 hours materially participating in those activities What qualifies as a real property trade or business (development, construction, management, brokerage, etc.) How to aggregate multiple properties for hour tracking The 7 IRS tests for material participation Why hiring a property manager disqualifies you Real court examples: Pinley v. Commissioner, Gragg v. United States, and Perez v. Commissioner How poor recordkeeping leads to denied deductions and audits Key takeaway: You don’t just need 750 hours — you need to materially participate and document everything. The IRS will not accept ballpark guesses or vague testimony. If done correctly, REPS allows you to treat rental income as active, letting you offset it against W-2 wages or other earned income. Book a consultation: https://briantboyd.com Disclaimer: This video is for educational purposes only and is not legal or tax advice. Always consult your CPA or attorney before implementing any strategy. #RealEstateProfessionalStatus #REPS #TaxAttorney #RealEstateTaxes #MaterialParticipation #IRS469 #RealEstateInvesting #TaxStrategy #BrianBoyd