Tag Archives: obamacare tax exemption

Obamacare Tax Code

How to Avoid Obamacare Tax: Become a real estate professional

 

Avoid Obamacare Tax: Another reason to become a real estate professional

Avoid the Obamacare tax and save 3.8%.  This strategy has a huge impact on your bottom line.  In my article How to claim Passive Loss Limitation Exemption on being exempt from the $25,000 passive loss limitation, I detailed the process on how to qualify as a real estate professional.  The Obamacare tax gives you another incentive to become a real estate professional in the eyes of the IRS.  Find out how.

Obamacare Tax Safe Harbor

The tax code provides a safe harbor for those who qualify as a real estate professional.  The entrance requirements into the harbor are as follows:

  • You must qualify as a real estate professional, and
  • You must participate 500 hours per year in real estate activities

Being a real estate agent or just owning rental properties is not enough to qualify as a real estate professional.  See How to claim Passive Loss Limitation Exemption on how to qualify as a real estate professional.

Real Estate Business Avoid Obamacare Tax

Here is some more good news.  Real estate professionals who qualified for the above criteria in five of the last ten years are considered to be in a real estate business.  That means profits from your rental real estate business is EXEMPT from the Obamacare Tax.  How about some more good news?  When your sell your property, profit from the sale is also avoid the Obamacare Tax.  Now this is a harbor you definitely want to chart a course to.

More tax advantages for Real Estate Business

Business income is exempt from the Obamacare Tax.  Your business has other tax advantages that are discussed elsewhere.

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