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  • videocam On-Demand
  • signal_cellular_alt Intermediate
  • card_travel Tax Preparer
  • schedule 110 minutes

Active vs. Passive Status for Real Estate Activities: Material Participation Rules, Short-Term Rentals, Real Estate Professionals

$197.00

This course is $0 with these passes:

CPE
ALL
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Description

IRC Section 469(c) defines a passive activity as any activity that involves the conduct of any trade or business in which the taxpayer does not materially participate. Real estate activities are, by default, passive. This classification limits a taxpayer's ability to deduct losses since passive losses can only absorb passive income. Passive losses accumulate until a taxpayer has passive income or the property is sold and the deduction is allowed. 

Investors often prefer to be classified as real estate professionals. This designation allows taxpayers to immediately offset passive income against ordinary income. Qualifications for real estate professionals are steep. They must spend more than one-half their time and more than 750 hours a year servicing the real estate trade or business. Additionally, they must pass a material participation test, separately for each property. These tests must be satisfied every year for the business to maintain REP status. An aggregation election is available that allows taxpayers to combine properties to meet the material participation test.

Short-term rentals have become more popular with the rise of rental services like Airbnb and Vrbo. Temp. Reg. Section 1.469-1T(e)(3)(ii) provides an exception to passive activity classification for qualifying tangible personal property used for seven days or less. This exception can provide planning opportunities for certain investors and their advisers.

Listen as our panel of federal tax experts clarifies the rules for active, passive, and material participation for real estate investors. 

Presented By

Wayne Roberts
Senior Advisor
Hall CPA, PLLC

Mr. Roberts is a Senior Advisor and Certified Public Accountant that specializes primarily in real estate at Hall CPA. 

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Nathan Sosa
Senior Advisor
Hall CPA, PLLC

Mr. Sosa, CPA, MST, is the Manager of the National Tax Department and the Audit Defense Division at Hall CPA. He specializes in consulting on technical tax issues, including Qualified Opportunity Zone structuring, partnership matters, and Section 469 considerations within the real estate industry and small business sector. Mr. Sosa also provides professional guidance to tax professionals and accountants, offering insights into complex tax strategies and compliance matters.

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Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

Date + Time

  • event

    Tuesday, June 10, 2025

  • schedule

    1:00 p.m. ET./10:00 a.m. PT

  1. Active vs. passive real estate investments: introduction
  2. Active participation
  3. Passive income
  4. Material participation
  5. Real estate professionals
  6. Short-term rentals
  7. Electing to aggregate rental activities
  8. Former passive losses
  9. Other considerations
    1. Net investment income tax
    2. 199A – Qualified Business Income deduction
  10. Examples
  11. Recent developments


The panel will cover these and other critical issues:

  • The importance of real estate activity status in tax planning
  • Differences in passive, active, and material participation
  • How short-term rentals are classified for tax purposes
  • The criteria for real estate professional status

Learning Objectives

After completing this course you will be able to:

  • Identify investors who might benefit from an aggregation election
  • Determine differences between passive, active, and material participation requirements
  • Ascertain the criteria for real estate professionals
  • Decide how short-term rentals are classified for tax purposes
  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite:

    Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.


BARBRI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

BARBRI CE webinars-powered by Strafford-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .