End-of-Year REPS Checklist: Are You on Track to Qualify?

It's the fourth quarter. Tax season is coming.

If you're pursuing Real Estate Professional Status, now is the time to check your progress, not in February when it's too late to fix anything.

Use this checklist to make sure you'll qualify and have the documentation to prove it.

Part 1: The 750-Hour Test

✅ Calculate your total hours

Add up all real estate hours logged so far this year.

Where you should be:

If you're behind: You have time to catch up, but you'll need to accelerate. See "How to Add Hours" below.

✅ Verify what you've counted

Review your log and confirm all hours are legitimate real estate activities:

Definitely counts:

• Property management and operations
• Tenant communication and leasing
• Maintenance coordination and repairs
• Property inspections
• Financial management and bookkeeping
• Acquisition and due diligence
• Construction and renovation oversight

Probably doesn't count (consult your CPA):

• Travel time to/from properties
• Real estate education and courses
• Time spent on properties you don't own
• Investment research for future deals

Be conservative. It's better to have 800 solid hours than 750 questionable ones.

✅ Check for gaps in your log

Scan your entries for:

• Missing weeks (did you forget to log in August?)
• Vague descriptions ("worked on rental" means what exactly?)
• Suspiciously round numbers (exactly 2 hours every time?)
• Missing property assignments (which property was this for?)

Fix these now while you still remember the details.

Part 2: The 50% Test

✅ Calculate your W-2/other occupation hours

REPS requires that you spend MORE time in real estate than any other occupation.

• Your W-2 or primary job hours this year: _______ hours
• (Full-time = roughly 2,080 hours. Part-time varies.)
• Your real estate hours: _______ hours

Do you pass? Real estate hours > other job hours?

• ✅ Yes → You pass the 50% test
• ❌ No → You do NOT qualify for REPS (unless your spouse qualifies)

✅ Consider the spouse strategy

If you can't pass the 50% test but your spouse can, REPS still works.

Your spouse needs:

• 750+ hours in real estate
• More RE hours than any other job they have
• Material participation in your rental activities

On a joint return, your spouse's REPS qualification allows you to deduct rental losses against your combined income.

Part 3: Material Participation (Per Rental)

REPS alone isn't enough. You also need to materially participate in each rental activity.

✅ Check material participation for each property

For each rental property (or grouped activity), verify you meet at least one test:

• Test 1: You participated 500+ hours in this activity
• Test 2: Your participation was substantially all the participation in this activity
• Test 3: You participated 100+ hours AND more than anyone else

Most common approach: Group all rentals into one activity, then meet the 500-hour test on the combined activity.

✅ Review your grouping election

If you're grouping rentals, confirm:

• You made the election properly (attached statement to your return)
• All grouped properties are similar (all residential, all in same geographic area, etc.)
• You haven't added properties that break the grouping logic

Warning: You cannot group short-term rentals (≤7 day avg stay) with long-term rentals.

✅ Document your participation

For each property or grouped activity, you should have:

• Total hours logged
• Activities performed
• Evidence that you (not a property manager) did the work

Part 4: STR-Specific Checks

If you're using the STR loophole instead of (or in addition to) REPS:

✅ Verify average guest stay

Calculate: Total guest nights ÷ Number of bookings = Average stay length

Must be 7 days or less to qualify for the STR loophole.

If your average stay is 8+ days, the property is treated as a standard rental and requires REPS for non-passive treatment.

✅ Check contractor hours

For the 100-hour material participation test, you must have worked more than anyone else.

• Your hours on this STR: _______ hours
• Cleaner's hours: _______ hours
• Property manager's hours: _______ hours
• Other contractors: _______ hours

Do you pass? Your hours > any individual's hours?

If your cleaner outworked you, you fail the 100-hour test. You'd need to use the 500-hour test instead. Learn more about tracking contractor hours.

Part 5: Documentation Audit

✅ Confirm your log is contemporaneous

Your time log should show:

• Entries created throughout the year (not all in December)
• Specific dates for each activity
• Detailed descriptions
• Timestamps (if using an app)

If your log looks like a year-end reconstruction, it won't hold up in an audit.

✅ Gather supporting evidence

Collect documentation that corroborates your logged hours:

• Bank/credit card statements showing property-related purchases
• Receipts from Home Depot, Lowe's, hardware stores
• Contractor invoices with dates
• Email threads with tenants, contractors, agents
• Calendar entries showing property visits
• Photos of repairs, inspections, property visits
• Property management software reports
• Mileage logs (if you tracked driving)

You don't need to submit these with your return, but have them ready if the IRS asks.

✅ Prepare your export

Create a summary report for your CPA showing:

• Total hours by category
• Total hours by property
• Monthly breakdown
• Year-to-date total

Most CPAs want a clean summary, not 365 individual entries.

Part 6: Last-Minute Hour Opportunities

If you're short of 750 hours, here are legitimate ways to add hours before December 31:

High-value activities (lots of hours)

• Year-end property inspections: Visit each property, document condition
• Lease renewals: Review leases, communicate with tenants
• Annual maintenance: HVAC servicing, gutter cleaning, winterization
• Financial review: Bookkeeping, expense categorization, budget planning
• Market research: Analyze rental rates, comps for your properties
• Contractor meetings: End-of-year planning with your team

Quick activities (small hours add up)

• Tenant communication: Check in on tenants, address concerns
• Listing optimization: Update photos, descriptions, pricing
• Vendor management: Review contractor performance, get quotes
• Insurance review: Annual policy review and comparison shopping
• Tax prep: Organize documents, meet with CPA

Warning: Don't inflate

The goal is to capture legitimate hours you might otherwise forget to log, not to fabricate activities.

If you spent 20 minutes on a task, log 20 minutes. Don't round up to an hour.

Auditors look for patterns of inflation. A log full of round numbers and vague descriptions raises red flags.

Part 7: Final Verification

✅ Complete this checklist

If any box shows "Fail" or "No," address it before year-end.

✅ Schedule CPA review

Book time with your tax professional to review:

• Your time log and supporting documentation
• Grouping election strategy
• Any gray areas in your hours (travel, education, etc.)
• How REPS impacts your return

Don't wait until March. CPAs are slammed during filing season.

Quick Reference: Key Numbers

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