How to Keep a REPS Time Log That Holds Up in an IRS Audit

The IRS doesn't require a specific log format for real estate professional status. Treasury regulations let you prove your hours by any reasonable means, including calendars, appointment books, and narrative summaries. What fails is the estimate built after the fact. The Tax Court keeps rejecting "ballpark guesstimates," fixed blocks of time per task, and "on call" hours. A log that holds up has a dated entry for each task, says who did it and on which property, and points to something that backs it up.

With 100% bonus depreciation back under the 2025 tax law, a cost segregation study can produce a large first-year loss. REPS is what lets that loss offset wages and other income. That raises the stakes on the log.

What the rules actually require

The regulation on proving participation is short. Temporary Treasury Regulation §1.469-5T(f)(4) says the extent of your participation "may be established by any reasonable means." Contemporaneous daily time reports aren't required if you can prove your hours another reasonable way. The regulation names appointment books, calendars, and narrative summaries as examples. IRS Publication 925 repeats the same standard.

So the law is flexible on format. Courts are strict on credibility. The burden of proof is on you, and the Tax Court has said many times that a reasonable record can't be a "ballpark guesstimate" (Moss v. Commissioner, 135 T.C. 365 (2010)).

For what goes into the count in the first place, see what counts toward real estate professional hours.

Why REPS claims fail in Tax Court

These are real, published decisions. Each one turned on the records.

• Mirch v. Commissioner, T.C. Memo. 2025-128 (December 2025). The taxpayers produced an undated log that gave every task a fixed amount of time. It listed 12 minutes to read an email and 12 minutes to send one, 7 hours of cleaning after every stay, and 8 hours of "site management" for each day the property was rented. The court threw out all 744.5 on-call hours because only actual time spent working counts. It doubted the cleaning hours because the couple also deducted professional cleaning. It found no grouping election, so each rental had to be tested separately. It also noted that the husband's hours could not count toward the wife's 750.
• Hairston v. Commissioner, T.C. Memo. 2019-104. The log showed 781 hours for the husband. The court found the hours were inflated by at least 150 and denied REPS for failing the 750-hour test.
• Moss v. Commissioner, 135 T.C. 365 (2010). This is the case courts cite for the rule that a "ballpark guesstimate" of hours isn't enough.

The pattern is the same in all three. The court did not question the law. It questioned the hours.

What every log entry should contain

Keep one line per task. Each line needs six things.

1. Date. The day you did the work.
2. Time. Start and end times, or the actual duration. Not a standard block.
3. Who. Which spouse did the work. REPS is tested per person.
4. Property or activity. Which rental, or which real estate business. Without a grouping election, material participation is tested property by property.
5. Task. Specific words. "Met plumber at Unit 3, approved $1,850 repair" beats "property management."
6. Proof. What backs it up. An email, text thread, invoice, work order, calendar invite, bank charge, or mileage record.

Here is what that looks like. The entries are an illustration, not a client record.

A spreadsheet works. So does a calendar you fill in as you go, or a time-tracking app. The format matters less than the habit.

Track your other work too

The more-than-half test compares your real estate hours to every hour you work in any trade or business. So the log is only half the proof. You also need a credible record of your other work.

If you have a job, your employer's timesheets, schedule, and PTO records will show your hours. Expect an examiner to compare them to your log. If you consult or run another business, track those hours the same way you track real estate. In Mirch, the court noted there was no evidence of how many hours the wife worked at the couple's law firm. That left no basis to find she passed the half test.

Evidence that backs up the log

A log is stronger when an outside record lines up with it. Save these as you go.

• Emails and texts with tenants, contractors, lenders, and brokers
• Invoices, work orders, and receipts with dates
• Calendar invites and appointment confirmations
• Bank and card charges at hardware stores and on-site vendors
• Mileage records for trips to the properties
• Listing, showing, and leasing records from your platforms
• Photos with dates from site visits

Habits that keep a log credible

• Log at least weekly. A week-old memory is still specific. A year-old memory is a guess.
• Record the real time. If a showing took 40 minutes, write 40 minutes. Identical blocks were a big part of what sank the log in Mirch.
• Keep each spouse's entries separate. You'll need them split for the REPS tests and combined for material participation.
• Don't log work someone else did. If you pay a property manager, cleaner, or contractor, their hours are not yours.
• Leave out waiting time. Being available for tenants or guests isn't work until you're actually doing something.
• Leave out investor time. Reviewing statements and reports doesn't count unless you run the day-to-day operation (Temp. Reg. §1.469-5T(f)(2)(ii)).
• Check the total before year end. If you're near 750 hours or close to half your working time, you'll want to know in November, not in April.

Red flags an examiner will notice

• A total that lands just above 750 hours
• The same amount of time for every task of a given type
• A log with no dates, or one created after the audit letter arrived
• Hours on days your employer's records put you at work
• Tasks you also paid someone else to do
• Hours for properties across the country with no travel records
• "On call" or "available" time counted as work

If you haven't been logging this year

Start now, and fix the gap honestly. Rebuild earlier months from your calendar, email, texts, and bank records. Be conservative. Mark those entries as reconstructed and note the source for each one. The regulation allows records that aren't contemporaneous, as long as they are a reasonable means of proof. Courts weigh them for credibility, and an honest reconstruction backed by documents reads very differently from round numbers. From today forward, log as you go.

Filing the position on your return

Two filing steps go with the log.

• Schedule E. If you qualified as a real estate professional, IRS Publication 925 says to report the rental income or loss from activities where you materially participated as nonpassive and complete line 43 of Schedule E.
• The grouping election. To treat all your rentals as one activity for material participation, attach a statement to your original return that says you are a qualifying taxpayer and are making the election under section 469(c)(7)(A) (Reg. §1.469-9(g)(3)). Listing every rental on one Schedule E is not an election. If you missed it, Rev. Proc. 2011-34 offers a late-election path for taxpayers who meet its conditions. Once made, the election binds you in every later year you qualify. You can revoke it only after a material change in your facts and circumstances.

If the IRS disallows REPS, the losses go back to passive and get suspended, not erased. An accuracy-related penalty of 20% under section 6662 can apply on top of the tax. That is one more reason to get the log right from the start.

On the California side, the log doesn't change the answer. California never adopted REPS, so rentals stay passive on your California return either way. Keep the log for the federal return. Our REPS and passive losses page explains the federal and California split.

Frequently asked questions

Does the IRS require a daily time log for real estate professional status?

No. Treasury Regulation §1.469-5T(f)(4) lets you prove participation by any reasonable means, including appointment books, calendars, and narrative summaries. A contemporaneous log is still the strongest proof, because the Tax Court rejects estimates made after the fact.

What should a REPS time log include?

One entry per task with the date, the actual time spent, which spouse did the work, which property or business it was for, a specific description of the task, and a reference to a record that backs it up, such as an email, invoice, or calendar invite.

Do on-call hours count toward the 750 hours?

No. Only time actually spent working counts. In Mirch v. Commissioner, T.C. Memo. 2025-128, the Tax Court threw out 744.5 hours the taxpayer logged for being on call for guests and repairs.

Can I rebuild my log after the year is over?

You can reconstruct hours from calendars, emails, texts, and receipts, and the regulation doesn't require records to be contemporaneous. But courts weigh reconstructed records for credibility and reject ballpark estimates. Be conservative, label reconstructed entries, and cite a source for each one.

Do I need to track my W-2 hours too?

Yes. The more-than-half test compares your real estate hours to all the hours you work in any trade or business. Your employer's timesheets and schedules are part of the proof, and an examiner may compare them to your log.

What happens if I lose REPS in an audit?

The rental losses you deducted against other income become passive again and are suspended until you have passive income or sell the property to an unrelated buyer in a fully taxable sale. You'll owe the tax difference with interest, and a 20% accuracy-related penalty can apply.

Get the log right before the year closes

If you're claiming REPS this year, or planning to, we can review your hours and records before December 31 while there's still time to fix gaps. Bring what you've logged so far and your most recent return. Book a complimentary 30-minute consultation.

Related reading: spousal REPS, the REPS tests and grouping election, and short-term rentals without REPS.

LaviCPA is a Los Angeles CPA firm for real estate investors. Shawn Lavi, CPA, is the firm's principal. Elias Lavi, CPA, is its founder and co-owner.