In today’s episode , we continue our conversation with Kelsey Head, a seasoned CPA and partner at Head Tiler LLP. With 19 years of tax experience, Kelsey shared her insights on how real estate investors can navigate the complexities of tax benefits, particularly focusing on the coveted real estate professional status.
Kelsey emphasized that becoming a real estate professional can significantly impact an investor’s ability to deduct passive losses and offset income. However, she pointed out that there are stringent requirements and common misconceptions to be aware of. For instance, full-time W-2 employees are unlikely to qualify as real estate professionals since more than 50% of their activities must be in real estate. Kelsey also highlighted the importance of documenting hours meticulously to meet the IRS’s criteria.
We delved into strategies for restructuring employment to meet the qualifications, such as transitioning from W-2 to 1099 and reducing work hours. Kelsey also touched on the potential for spouses to qualify, thereby extending the benefits to both partners.
Listeners were cautioned against common pitfalls and misinformation, such as the misconception that holding a real estate license or working in mortgage lending automatically qualifies one as a real estate professional.
Kelsey’s expertise was invaluable in shedding light on the nuances of achieving real estate professional status and the significant tax advantages it can offer. Her advice is a reminder of the importance of consulting with tax professionals to navigate the complex tax landscape in real estate investing.
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About Kelsey Head:
As a partner at Head Tyler LLP, a firm she founded in 2020 amid the COVID pandemic after leaving a large firm where she also held a partner position, Kelsey Head brings almost 18 years of tax experience and CPA expertise to her role. With a wealth of knowledge, she establishes herself as a trusted expert in the field. Committed to providing clients with valuable insights and guidance, Kelsey’s extensive tax background defines her as a reliable professional.
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