Go Zone Qualification Working Less Than Full time

Yet another special case that could allow you to benefit from a substantial Go Zone bonus depreciation is if one or the other of you works less than full time. Let us explain how this works...

Go Zone Qualification Special Case 4

While it is extremely common to have one member of a couple working part time, few tax advisors know that this might give you a great way to offset the income of the other partner, or of your other investments.

Consider the case of one spouse working with high income and another that does not work. It is quite conceivable that with the purchase of one or more Go Zone properties, the non-working spouse could be set up to run a management LLC for the purposes of managing those properties.

By accounting for all time spent while researching properties on the net, dealing with advisors, making decisions on renters, logging incoming income, etc., it becomes quite conceivable for that person to now qualify as a real estate professional!

The benefits of doing this are substantial. If the non-working spouse meets the real estate professional requirements, then all bonus depreciation losses could be used to reduce the active income of the working spouse. This could amount to thousands of dollars.

Qualification as a Real Estate Professional

Remember.... You qualify as a real estate professional for the year if you met both of the following requirements:

1. More than half of the personal services you performed in all trades or businesses during the tax year were performed in real property trades or businesses in which you materially participated.
   
2. You performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated.

*** Note: You do not have to get a real estate license to qualify as a real estate professional.

Finally, if your adjusted gross income is greater than $150,000, you and your spouse both work full time, and you have no passive income, then you are admittedly in the most difficult category to benefit from the Go Zone bonus depreciation.

If this is your situation, we highly suggest that you explore all options, including having one partner quit his or her job to manage the real estate investments. The benefits of being a real estate professional far outweigh the few disadvantages, especially when it comes to benefiting from the Go Zone bonus depreciation.