I am a realtor. I have been filing schedule E with my rentals (>10 properties). I have been told I can combine these rentals into my schedule C. Thereby I can reduce my self employment tax. Can I still do this? I have elected to file as a real estate professional, and I can deduct my losses in my 1040 against my income, but I pay self employment tax on all my schedule C net income.

ANSWER

The BIDaWIZ Team's Answer:

If you meet the requirements of a real estate professional as detailed in IRS Publication 527, you would complete Schedule C and prepare a separate Schedule SE and report your income and loss on line 43 of Schedule E of your form 1040. The requirements to be considered a real estate professional are: 1) more than half of the personal services you perform in all trades or businesses during the tax year are performed in real property trades or businesses in which you materially participate and 2) You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate.