tax planning/REPS/cost-seg/bonus-dep questions

[Jay Bandi]

Hi all, 

I need some advice as i am getting conflicting info from my CPA/agent/cost-seg company

I have 2 w2 jobs and 4 1099 jobs (all in same line of work). I will work close to 800-900hrs in 2021 in all that work combined. My AGI would be more than 150000 and will offset any REI advantages.

I bought 2 MFH in the later half of this year. The hope was to use use bonus depreciation to offset my active income and reinvest next year. These are OOS and managed by PM.

I am not sure if will be able to accumulate enough REPS hours by the end of the year. I can plan better next year and get REPS 

Questions:

Do you HAVE to do bonus depreciation the first year property is in service or can it be done later (eg. next year, using the 3115 election, change in accounting method). I have talked to 3 CPAs and there is no consensus. If I can delay bonus depreciation in 2022, i can plan to work less and get enough RE hours

If I do bonus depreciation first year and do not have REPS status (accumulate passive losses), can you unlock the passive losses in a later year when you get REPS status. The cost-seg company says I can but CPA's say no

If I get a STR and materially participate (<100 hours, >anyone else) to make my STR income 'non-passive', can I use that status and use the passive losses from LTR against to offset 1099/W2 income

Any help/suggestions will be appreciated.

Thanks in advance.

[Ashish Acharya]

Originally posted by @Jay Bandi:

Hi all, 

I need some advice as i am getting conflicting info from my CPA/agent/cost-seg company

I have 2 w2 jobs and 4 1099 jobs (all in same line of work). I will work close to 800-900hrs in 2021 in all that work combined. My AGI would be more than 150000 and will offset any REI advantages.

I bought 2 MFH in the later half of this year. The hope was to use use bonus depreciation to offset my active income and reinvest next year. These are OOS and managed by PM.

I am not sure if will be able to accumulate enough REPS hours by the end of the year. I can plan better next year and get REPS 

Questions:

Do you HAVE to do bonus depreciation the first year property is in service or can it be done later (eg. next year, using the 3115 election, change in accounting method). I have talked to 3 CPAs and there is no consensus. If I can delay bonus depreciation in 2022, i can plan to work less and get enough RE hours

If I do bonus depreciation first year and do not have REPS status (accumulate passive losses), can you unlock the passive losses in a later year when you get REPS status. The cost-seg company says I can but CPA's say no

If I get a STR and materially participate (<100 hours, >anyone else) to make my STR income 'non-passive', can I use that status and use the passive losses from LTR against to offset 1099/W2 income

Any help/suggestions will be appreciated.

Thanks in advance.

Do you HAVE to do bonus depreciation the first year property is in service or can it be done later (eg. next year, using the 3115 election, change in accounting method). I have talked to 3 CPAs and there is no consensus. If I can delay bonus depreciation in 2022, i can plan to work less and get enough RE hours - Yes it can be retroactive. It is better to wait until you qualify as REP to perform this. 

If I do bonus depreciation first year and do not have REPS status (accumulate passive losses), can you unlock the passive losses in a later year when you get REPS status. The cost-seg company says I can but CPA's say no. - Nope, they will be suspended as PAL. That is why I said wait until you qualify. 

If I get a STR and materially participate (<100 hours, >anyone else) to make my STR income 'non-passive', can I use that status and use the passive losses from LTR against to offset 1099/W2 income. -  You question is confusing. If you are doing STR and making it non-passive, there is no need for the REP status and your LTR does not come into play for this stragegy.