Rental real estate activities are treated as passive activities for any tax year unless: The taxpayer qualifies as a real estate professional. The taxpayer qualified as a real estate professional in any three of the preceding five years. Less than half of the taxpayer's personal services performed during the year were performed in real property trades or businesses in which they materially participated. The taxpayer performed more than 500 hours of services in real property trades or businesses in which they materially participated.