MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

How To Be A Real Estate Professional (IRS Rules) #investing #taxes

16 Sept 2026 · 1 min

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In this concise monologue, Mark Kohler outlines the three IRS tests required to qualify as a real‑estate professional for tax purposes. First, a taxpayer must log at least 750 hours of real‑estate work in a year (roughly 13 hours per week). Second, real‑estate activities must be the taxpayer’s primary occupation—meaning no other day‑job or full‑time employment, though a real‑estate license isn’t required. Third, the taxpayer must be materially involved in the real‑estate activities, which excludes merely hiring a property manager and doing nothing. Kohler emphasizes that meeting all three criteria is essential to claim real‑estate‑professional status and benefit from related tax advantages.

Chapters

To be a real estate professional, there's 3 tests. You have to do real estate 750 hours a year, which is about 13 hours a week. That's quite a bit of work. You might have multiple rentals. You might be a handyman, a contractor, fix and flipper, wholesaler. That's cool. But you have to meet all 3 tests. I'm gonna put number 1 plus number 2, and that is your primary occupation has to be in real estate. Now, it doesn't mean you have to be a licensed realtor or a licensed contractor, but you can't have another day job. You've gotta be like all in on real estate, whatever your strategy is. Even if you're fixing and flipping your own property. And third, you have to be materially involved. You can't be sitting on an island in the South Pacific drinking a margarita going, oh, I'm a real estate professional, this is all I do. Well, what the hell do you do? You just hire property managers, you do nothing. So you've got to be able to show all 3 of these. Now, if you can show all 3, you can qualify as a real estate professional.