going to irs audit... need expert advice... how to prove i'm real estate professional?

1. I have more than 25K losses on my real estate (have 5 properties).

2. have a W2 for full time job. (very very flexible). 4 weeks vacation, personal time... have letter from manager to support this.

3. don't have ANY logs of time spent.

4. have ALL support for supples, c&m and repairs.

4. i actually do spend more in rental activity than full time job.

6 Answers

  • 10 years ago
    Favorite Answer

    Contact a accountant and go over all your expenses, paperwork and what the law allows. Check with a lawyer for additional help. You are allowed to deduct your expenses the irs is question all your deductions with the paperwork you have stated you should have all you need. Best Wishes and Good Luck with your irs audit.

    Source(s): Real Estate Tycoon and Investor. Been audited before it is not as bad as one would think.
  • Bibs
    Lv 7
    10 years ago

    Actually, you do not want to be classed as a real estate professional, because your property will become inventory, and you will not get the long term capital gain provision under the law. All you need to do is show that you are managing your own property. You should have a log of daily travel mileage to your properties. Do not worry. Do not volunteer any information. Make your answers short. Calm down. Your fears can work against you. Let them make their adjustments if any. Do not give them any personal information, like cost of living or personal check book. You did separate your business from personal checks in a separate account didn't you? Whatever happens, after they make an assessment, if any, you can always get a CPA or Enrolled Agent to appeal the assessment.

    Source(s): CPA and retired tax auditor.
  • 10 years ago

    Real estate Professionals deal with other peoples properties - NOT their own

    so that title won't work with IRS - Gee, with that much loss not wonder they are

    investigating - even I would question that amount unless you had some really major repairs

    that needed to be done - if you can prove with facts, figures and receipts how you

    derived at your taxable rental income - then you have nothing to worry about.

  • Frank
    Lv 7
    10 years ago

    There are two basic questions:

    1. Can you prove the actual expenses

    2. Are these business expenses for a business that you intend to make a profit from one day, or is it a hobby?

    The second question will likely be the focus of the audit. For more info on this, directly from the IRS, see:


  • How do you think about the answers? You can sign in to vote the answer.
  • Anonymous
    4 years ago

    properly, that they had be incorrect, because of the fact the IRS only isn't "working Obamacare." Their participation in the low priced Care Act is constrained to amassing the penalty value from people who do not fulfill the requirement to purchase scientific well-being coverage. exciting fact: The IRS has no skill to stress human beings to pay the value. The ACA bars the IRS from bringing a criminal enforcement case against somebody who refuses to pay the non-coverage penalty. And it makes it very confusing, if not impossible, for it to enforce a tax lien. the only way they might convey mutually it truly is deducting it from any tax refund due.

  • 10 years ago

    This doesn't make you a real estate professional, it makes you an investor.

    You don't need any time logs, you can't claim any credits based on your time spend as a landlord, only real expenses.

    If you have been claiming time you are in lots and lots of tax fraud trouble.

Still have questions? Get your answers by asking now.