What's inside
| Tab | What it does |
|---|---|
| Instructions | The two REPS tests, the separate material participation requirement, how to log, and what the yellow input cells are. |
| Hours Log | ~400 rows: date, property/activity, category (8-option dropdown), specific description, hours. One example entry shows the level of detail that survives an audit. |
| Summary | Auto-calculates the 750-hour test (total, remaining, pass/fail), the more-than-half test (enter your other-job hours in one yellow cell), and hours by category and by property. |
Why contemporaneous logging decides REPS audits
The regulations let you establish participation "by any reasonable means" — but the Tax Court has drawn a hard line in practice. Taxpayers who kept dated, specific, as-you-go records have won; taxpayers who showed up with round-number estimates, calendars reconstructed months later, or "approximately 800 hours" summaries have lost, over and over. The IRS treats a log created after the audit notice as nearly worthless. The habit matters more than the tool: log the same day, or at worst the same week.
Specificity is the second half of credibility:
✗ January · rentals · "worked on properties" · 40 hrs
Watch the red flags auditors are trained on: identical hours every day, suspiciously tidy totals (exactly 750.0), travel and "education" padding out the log, and investor-level activities — reviewing statements, browsing Zillow — counted as participation. If the real work is happening, an honest log clears 750 with room to spare; the REPS calculator's audit-risk section covers what typically sinks claims.
The tests this template tracks
750-hour test: more than 750 hours in real property trades or businesses in which you materially participate. The Summary tab totals your log and shows hours remaining.
More-than-half test: those hours must exceed half of all your personal-service hours for the year. Enter your other-job hours in the yellow cell and the tab computes your share — this is the test that makes REPS nearly impossible alongside a full-time W-2, and why the strategy typically uses a non-W-2 spouse. Spouses cannot combine hours for either test.
Material participation, per property: a separate hurdle the summary flags but can't fully automate — it's tested property by property unless you file an aggregation election. Filter the log by property to check the common tests: 500+ hours, substantially all the participation, or 100+ hours with no one participating more.
Where the hours pay off
If REPS holds, rental losses convert from passive to non-passive and offset W-2 income on a joint return — instead of being suspended entirely above $150,000 MAGI. To see what that's worth in dollars — cost segregation, bonus depreciation, the year-1 refund, recapture at sale, and whether the whole strategy beats an index fund — run your numbers through the real estate professional status calculator. And before any of the tax math matters, the property itself has to work: the rental property calculator underwrites the deal on its own merits.
Frequently asked questions
What makes a log "contemporaneous"?
Kept as the work happens — same day or same week. Court cases consistently reject estimates and calendars reconstructed after an audit notice. Each entry: date, property, category, specific description, hours.
What activities count toward the 750 hours?
Hands-on work in real property businesses you materially participate in: management, tenant screening, maintenance you do or directly supervise, rental bookkeeping, acquisitions, renovations. Investor-level activity (reviewing statements, casual market research) doesn't; travel and education hours are contested — don't build the log on them.
What should each entry look like?
Specific and verifiable: "screened 2 applications, ran credit checks, called references — 1.5 hrs" survives scrutiny; "worked on rentals — 8 hrs" doesn't. Avoid identical repeated entries and round-number totals.
Do I need a separate log per property?
One log with a property column works — but material participation is tested per property unless you've filed an aggregation election, so keep the property field filled in and use the per-property breakdown on the Summary tab.
This template and page are for general informational and record-keeping purposes only — not tax, legal, or financial advice. REPS qualification is fact-specific and heavily audited; consult a qualified CPA or tax attorney before relying on it.