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If I meet the 750-hour test, do I also meet the 500-hour material participation test?
No. This is a common misconception, and there are some scenarios that can get you in trouble.
For example, many license real estate agents can easily prove the 750 hour test for being a real estate professional. However, they do not spend enough time on their own personal rental properties or rental activities, and therefore cannot prove material participation.
While married couples can combine their hours to demonstrate material participation they cannot do the same for real estate professional. In other words, you and your spouse spent 500 hours combined working on your rentals. You still need to show either yourself or your spouse spending 750 hours in a real estate activity, and have over 50% of the overall time being spent on the real estate activity.