Question 1

What is REP status for real estate investors?

Accepted Answer

Real Estate Professional (REP) status is an IRS designation that allows real estate investors to deduct rental losses against ordinary income without passive activity limitations. To qualify, you must spend more than 750 hours per year in real estate activities and more time in real estate than any other profession.

Question 2

How does Nestworthy help with IRS audits?

Accepted Answer

Nestworthy creates audit-proof documentation by AI-validating every REP hour entry, cross-referencing activities with bank transactions via Plaid, generating credibility scores, and producing CPA-ready reports. Every entry is timestamped and immutable, creating a defensible record.

Question 3

What is the 750-hour material participation test?

Accepted Answer

The 750-hour test is one of the IRS requirements for Real Estate Professional status. You must spend at least 750 hours per year materially participating in real estate trades or businesses. Nestworthy tracks your pace toward this threshold and flags risks in real time.

Question 4

Can Nestworthy connect to my bank account?

Accepted Answer

Yes. Nestworthy uses Plaid to securely connect to over 12,000 banks. Transactions auto-import and AI matches them to your REP activities, creating corroborated evidence that strengthens your audit defense.

Question 5

How does AI-validated REP tracking work?

Accepted Answer

When you log REP hours via voice or text, Nestworthy's AI categorizes the activity, assigns a credibility score from 0 to 100, detects potential backfill risks, and cross-references the entry against your bank transactions and documents for corroboration.

Question 6

Is my financial data secure on Nestworthy?

Accepted Answer

Nestworthy uses bank-level security with SOC 2 compliant infrastructure. Bank connections are handled through Plaid's encrypted system, and all data is encrypted at rest and in transit. We never store your banking credentials.

Why Manual REP Hour Tracking Puts Your Deductions at Risk