What is Real Estate Professional property?
Depending on your classification as an Active Investor or Real Estate Professional and your income level, there is a good chance your rental property will not only give you tax-free cash flow, but an overage of tax deductions you can use against your other income. With that said, this is something you want to discuss with your tax professional before investing so your expectations are realistic. Real estate returns are directly linked to the rents that are received from tenants. Some leases contain provisions for rent increases to be indexed to inflation. In other cases, rental rates are increased whenever a lease term expires and the tenant is renewed.
Are you talking about real estate professional as in when figuring your taxes? If so, that has nothing to do with being licensed. Mainly it's someone who works at least 50% of their working hours in real estate and a minimum of 750 hours total (per year) in a real estate field. It could be a licensed sales person or a full time investor or a property manager, etc. Licensing helps prove the point with the IRS but certainly isn't necessary. The designation is there as part of the process of allowing or disallowing real estate losses to be taken off your other income. Hope this helps.
A Real Estate Professional generally speaking, is a REALTOR and a person who buys or sells real estate can only be identified as a REALTOR if they subscribe to the National Code of Ethics. If they do subscribe to the ethics guidelines and are officially recognized as such, they can legally be called REALTORS. As in any 'profession' it takes specialized education and training as opposed to someone who practices that profession without the education and training.
