- More Than 750 Hours of Real Estate Work
The first requirement is that you must spend more than 750 hours a year working in real estate activities. This includes time spent buying, selling, managing, or developing property. It also includes time spent working as a real estate professional, such as being a property manager or an investor. - More Than Half Your Work Time in Real Estate
You must also spend more than half of your working hours in real estate activities. This is where many people get tripped up. If you have a full-time job that isn’t related to real estate, it may be difficult to meet this requirement.
If you qualify for REPS, you could potentially use the losses from your rental property investments to offset other income, reducing your overall tax liability. But let’s take a closer look at the rules that define how to qualify for real estate professional status (REPS) in 2025.
Page 2: Detailed Steps to Qualify for REPS in 2025
Step 1: Track Your Hours Carefully
To qualify for real estate professional status (REPS), one of the most important steps is keeping an accurate log of your time. The IRS requires you to prove that you have spent more than 750 hours working in real estate. Keep detailed records, including dates and hours worked on specific activities, such as:
- Showing properties
- Managing rental properties
- Buying or selling real estate
- Working with contractors or property maintenance teams
If you can show that you’ve spent 750 hours or more on real estate activities, you’re one step closer to qualifying for REPS.
Step 2: Understand the Half-Time Rule
The second part of qualifying for REPS is the “more than half your time” rule. This means that if you work 2,000 hours in a year, at least 1,000 hours of that must be spent on real estate activities. If you’re already working another job outside of real estate, meeting this requirement can be challenging.
For example, if you have a 40-hour-a-week job that is unrelated to real estate, you’ll need to work at least 20 hours a week in real estate activities. This can be difficult for people who are just starting in the business or have other full-time commitments.
Step 3: Review Your Real Estate Activities
The IRS is specific about what counts as real estate work. It’s important to understand which activities qualify as part of your time spent in real estate. These activities can include:
- Managing rental properties
- Overseeing property development or construction
- Acting as a real estate broker or agent
- Providing property maintenance or renovation services
Make sure to evaluate your role in real estate and track time spent on these activities carefully. If you’re unsure whether an activity qualifies, it’s worth consulting with a tax professional who understands the real estate professional status (REPS) rules.
Page 3: Common Challenges and Solutions for REPS Qualification
Common Challenges When Qualifying for REPS
- Proving the Time Requirement
One of the biggest challenges people face when trying to qualify for REPS is proving that they’ve spent the required hours working in real estate. Many people who work part-time or don’t have clear records of their time spent may not be able to prove that they meet the 750-hour threshold. Solution: Keep a time log. Use apps or spreadsheets to track every hour you spend on real estate activities. At the end of the year, you’ll have a record to show if you’ve met the qualifications. - Meeting the “More Than Half Your Time” Rule
If you have a full-time job outside of real estate, it may be hard to meet the “more than half your time” rule. If you are trying to work full time in real estate while also holding down another job, balancing your time can become overwhelming. Solution: Consider reducing your hours in other jobs or transitioning to part-time work. For many real estate professionals, full-time work in real estate may eventually become the most lucrative option, especially with the tax savings from REPS. - Multiple Jobs or Roles
Sometimes people qualify for REPS, but they aren’t aware of all the real estate activities that count. If you’re working as an investor and also as a property manager, you may be able to count both roles toward your hours. Solution: Review all your real estate-related activities. Even if you’re not actively working in real estate every day, tasks like overseeing a property’s upkeep or reviewing lease agreements may qualify toward your total hours.
Conclusion: Is REPS Worth It?
Qualifying for real estate professional status (REPS) can be a game-changer for your tax situation. If you meet the qualifications, you can deduct rental losses against other income, significantly reducing your tax bill. However, it’s not always easy to meet the requirements, and it may take some time and effort to track your hours accurately and meet the criteria.
In 2025, the real estate market is evolving, and more people are finding opportunities to invest in properties. If you’re serious about making a career out of real estate, learning how to qualify for real estate professional status (REPS) could be one of the best decisions you make. Take the time to understand the requirements and set yourself up for long-term success.
