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How Many Physicians Are Claiming Real Estate Professional Status?

the Atlanta skyline with a pink and blue sunset

Summary: We conducted a poll to measure the percentage of physicians who claim Real Estate Professional Status. The article summarizes the results of the poll.

 

[Disclaimer: We are not accountants, lawyers or financial advisors, so please consult your own team of professionals about the topics covered in this article.]

Real Estate Professional Status allows you to make losses that are typically passive into non-passive losses. The net result is that these non-passive losses can be used to offset earned income (W2 or 1099) and reduce your taxes. REPS is available to anyone as long as they meet the requirements. It is especially advantageous for married couples because only one spouse has to meet the requirements in order to qualify.

The details of claiming this status and the tax benefits were covered in detail in a prior post.

While the benefits of Real Estate Professional Status are clear, what is less known the percentage of physicians who claim this status on their tax returns.

After a fairly exhaustive search, we could not find a single article quantifying the use of Real Estate Professional Status among physicians or even in the general population. When you think about it, it makes sense that this information would not be readily available. The data lies within the IRS, and there would likely be no reason for them to provide this information to the public.

Because of the lack of data on the topic, we decided to conduct a poll in one of the general physician communities in Facebook (labeled “ General MD Community” in the chart) to answer this question.

We also conducted the same poll in one of our Semi-Retired MD Facebook Communities to see if there were any differences between the groups.

Below are the results of the two polls.

 

The Results

The results weren’t all that surprising to us given the fact that we blog about Real Estate Professional Status.

The poll showed that only 8% of those who responded are claiming this status or planning to claim this status in the next several years (2% and 6%, respectively). The vast majority (85% of respondents) had never heard of Real Estate Professional Status.

The comparison group served as an interesting contrast. Our Semi-Retired community consists of physicians who are interested in both real estate investing and achieving semi-retirement as quickly as possible, so many of them already know the benefits of Real Estate Professional Status.

As a result, a much smaller percentage (only 22%) had never heard of Real Estate Professional Status and 58% were either already claiming or planning to claim this status in the near future.

 

So why do so few physicians take advantage of this tax shelter?

There are probably a lot of reasons for this, but the one that stands out from our poll is that most just don’t know about Real Estate Professional Status. The comparison group clearly shows that if you know about it and understand the benefits, you are more likely to claim this status.

Therefore, we would imagine that the percentage of physicians who would want to claim Real Estate Professional Status, if they knew about it, would be much higher than 8%.

The question is, are you going to be one of them?

Please leave us your comments below!

Do you want to learn how to creatively fund your real estate portfolio and achieve financial freedom? Join the conversation! Follow our Semi-Retired MD  Facebook page and join our Doctors or Professionals  group!

Semi-Retired M.D. and its owners, presenters, and employees are not in the business of providing personal, financial, tax, legal or investment advice and specifically disclaims any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained in this blog. Semi-Retired M.D., its website, this blog and any online tools, if any, do NOT provide ANY legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought. In addition, Semi-Retired M.D. does not endorse ANY specific investments, investment strategies, advisors, or financial service firms.

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Hi, we’re Kenji and Leti

we provide coaching and mentorship for doctors and high-income earners

Several years ago, we were newlyweds working as full-time hospitalists. On paper, it looked like we had everything: the prestigious careers, the happy marriage, the luxurious rental home, the cars, etc.

But in reality? Despite having worked for several years, we had very little savings. Despite our high income, we had very little freedom in terms of time or money.

One thing was clear: we had to do something.

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