Uploaded August 2026 | Updated September 2026, 1 week ago
Interested in learning how to qualify for Real Estate Professional Status? Schedule a free consultation today: aba.link/dxa4
In this video, tax attorney Toby Mathis explains the 3 tests real estate investors need to understand before rental property losses can potentially offset W-2 wages, business income, or a spouse’s paycheck.
WATCH NEXT 👉 How To Start An LLC For Rental Properties (And Reduce Taxes!) youtube.com/watch?v=VpKdeUh_lTc
👉 How To Do A Cost Segregation Study: When It Saves You Money And When It Doesn’t youtu.be/beMOZDrXOJ8
Qualifying as a Real Estate Professional is only the first step. You may still need to meet the material participation rules and properly group your rental activities before those losses become non-passive.
Learn how the 750-hour and more-than-50% tests work, why married couples have different rules for Real Estate Professional Status and material participation, and how a grouping election can completely change the tax treatment of multiple rental properties.
Register for a FREE upcoming workshop today if you want to protect your business and personal assets from snoopy lawyers and creditors. Save Your Seat: aba.link/v8mv
🔔 Stay ahead of the curve. Subscribe for cutting-edge insights on real estate investing, business strategies, and more!
Show Notes:
0:00 Intro
2:18 Test #1: Real Estate Professional Status
3:46 How Passive Rental Losses Really Work
4:44 The 750-Hour & 50% Tests Explained
6:55 What Counts as a Real Estate Trade or Business?
7:33 Why Tracking Your Real Estate Hours Matters
8:49 The 5% Ownership Rule Most Investors Miss
9:38 Real Estate Professional Rules for Married Couples
11:21 Test #2: Material Participation
13:37 The Material Participation Tests That Matter Most
14:43 The Per-Property Trap
16:13 When Spouses Can Combine Their Hours
18:05 Test #3: The Grouping Election
19:00 How Grouping Multiple Rentals Can Unlock Losses
21:39 The Short-Term Rental Exception
22:31 How Short-Term Rentals Can Bypass REP Status
24:31 Cost Segregation & Bonus Depreciation Explained
26:08 Creating a Tax Loss vs. Actually Using It
28:39 The $25,000 Rental Loss Exception
30:39 Net Investment Income Tax & Rental Real Estate
32:41 The State Tax Trap Investors Miss
32:59 California vs. Federal Real Estate Tax Rules
34:45 The #1 Documentation Mistake That Can Kill Your Deduction
36:43 The 3-Test Real Estate Tax Framework
39:16 Cost Segregation, Suspended Losses & Other Tax Questions
40:49 Outro
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TAX TUESDAY LIVE
Join us every other Tax Tuesday, where you can have your tax questions answered live by our experts entirely FREE. Register Now 👉 aba.link/0ed8eb
~~~~
CONTACT US
Phone: 800.706.4741
Email: info@andersonadvisors.com
Fax: 702.664.0545
ABOUT TOBY MATHIS
Toby Mathis, Esq. is the best-selling author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Toby is a tax attorney and founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. Learn more at aba.link/tobyaba
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WARNING: I will NEVER ask you to contact me through YouTube comments, telegram, or WhatsApp. I have a checkmark next to my name, and my comment will be highlighted. Fake accounts do not have that. Please be aware of fake accounts trying to scam you using my name and picture.
The information provided in this video should not be construed or relied on as financial, investment, or legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#LLC #realestateprofessional #repstatus #RealEstateInvesting
Interested in learning how to qualify for Real Estate Professional Status? Schedule a free consultation today: aba.link/dxa4
In this video, tax attorney Toby Mathis explains the 3 tests real estate investors need to understand before rental property losses can potentially offset W-2 wages, business income, or a spouse’s paycheck.
WATCH NEXT 👉 How To Start An LLC For Rental Properties (And Reduce Taxes!) youtube.com/watch?v=VpKdeUh_lTc
👉 How To Do A Cost Segregation Study: When It Saves You Money And When It Doesn’t youtu.be/beMOZDrXOJ8
Qualifying as a Real Estate Professional is only the first step. You may still need to meet the material participation rules and properly group your rental activities before those losses become non-passive.
Learn how the 750-hour and more-than-50% tests work, why married couples have different rules for Real Estate Professional Status and material participation, and how a grouping election can completely change the tax treatment of multiple rental properties.
Register for a FREE upcoming workshop today if you want to protect your business and personal assets from snoopy lawyers and creditors. Save Your Seat: aba.link/v8mv
🔔 Stay ahead of the curve. Subscribe for cutting-edge insights on real estate investing, business strategies, and more!
Show Notes:
0:00 Intro
2:18 Test #1: Real Estate Professional Status
3:46 How Passive Rental Losses Really Work
4:44 The 750-Hour & 50% Tests Explained
6:55 What Counts as a Real Estate Trade or Business?
7:33 Why Tracking Your Real Estate Hours Matters
8:49 The 5% Ownership Rule Most Investors Miss
9:38 Real Estate Professional Rules for Married Couples
11:21 Test #2: Material Participation
13:37 The Material Participation Tests That Matter Most
14:43 The Per-Property Trap
16:13 When Spouses Can Combine Their Hours
18:05 Test #3: The Grouping Election
19:00 How Grouping Multiple Rentals Can Unlock Losses
21:39 The Short-Term Rental Exception
22:31 How Short-Term Rentals Can Bypass REP Status
24:31 Cost Segregation & Bonus Depreciation Explained
26:08 Creating a Tax Loss vs. Actually Using It
28:39 The $25,000 Rental Loss Exception
30:39 Net Investment Income Tax & Rental Real Estate
32:41 The State Tax Trap Investors Miss
32:59 California vs. Federal Real Estate Tax Rules
34:45 The #1 Documentation Mistake That Can Kill Your Deduction
36:43 The 3-Test Real Estate Tax Framework
39:16 Cost Segregation, Suspended Losses & Other Tax Questions
40:49 Outro
---------------------------------------------------------------------------------------------------------
TAX TUESDAY LIVE
Join us every other Tax Tuesday, where you can have your tax questions answered live by our experts entirely FREE. Register Now 👉 aba.link/0ed8eb
~~~~
CONTACT US
Phone: 800.706.4741
Email: info@andersonadvisors.com
Fax: 702.664.0545
ABOUT TOBY MATHIS
Toby Mathis, Esq. is the best-selling author of Infinity Investing: How the Rich Get Richer And How You Can Do The Same. Toby is a tax attorney and founded Anderson Business Advisors, one of the most successful law, tax, and estate planning companies in the United States. Learn more at aba.link/tobyaba
---------------------------------------------------------------------------------------------------------
WARNING: I will NEVER ask you to contact me through YouTube comments, telegram, or WhatsApp. I have a checkmark next to my name, and my comment will be highlighted. Fake accounts do not have that. Please be aware of fake accounts trying to scam you using my name and picture.
The information provided in this video should not be construed or relied on as financial, investment, or legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#LLC #realestateprofessional #repstatus #RealEstateInvesting
