Rental income is taxed differently if you qualify as a real estate professional with the IRS. However, reaching pro status takes a time commitment of 750 hours per year. If you’re thinking about becoming a real estate professional, you might be wondering what types of activities count toward those 750 hours.
On this Q&A Monday, I’m answering a listener question about how to qualify with the IRS as a real estate professional. Additionally, I’m taking two more questions about refinancing after using business lines of credit, and how to make the most out of the equity in your rental property.
On this episode you’ll learn:
- What activities count toward becoming a real estate professional.
- How quickly you can refinance after purchasing with business credit.
- How to find a HELOC on a rental property.
What Activities Count Toward Becoming a Real Estate Professional
Becoming a real estate professional is a great way to alter your taxes. In order to qualify as a real estate professional, an investor must spend 750+ hours per week working on his or her portfolio. This doesn’t mean you need to be a DIY landlord, it just means that you have to spend your time nurturing your portfolio. These duties can include research and education, communicating with your team, and more. My advice would be to keep notes and track your time. For specific tax advice, please consult your CPA or reach out to the team at WealthAbility.
How Quickly You Can Refinance After Purchasing with Business Credit
In theory, you can refinance immediately after purchasing a rental property with business credit. I would urge you to ensure you have a strong strategy in place to pay back the credit company, so that you’re not stuck with high interest debt down the road. Consider using your rental income to start paying down what you’ve borrowed.
How to Find a HELOC on a Rental Property
If you’ve recently struggled to find a HELOC for your rental property, you’re not alone. Many banks have tightened their regulations during the pandemic. You can always try local banks, but you might have better luck seeking other options during this time. Alternatively, try applying for a refinance or seek out private lenders.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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