395. Debunking 5 Material Participation Myths Real Estate Investors Keep Getting Wrong

Material participation is one of the most important and misunderstood tax rules for real estate investors.

In this episode of the Tax Smart REI Podcast, Tom and Nate debunk five common myths involving Real Estate Professional Status (REPS), short-term rentals, the 100-hour test, property managers, equipment rentals, and partnerships.

They also explain when a spouse’s hours count toward material participation, why those hours cannot be combined to meet the 750-hour REPS requirement, and what investors should know about Deferred Sales Trusts (DSTs). If you’re using real estate losses as part of your tax strategy, this episode covers the material participation rules and misconceptions you need to understand.

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