All Forum Posts by: Ashish Acharya

Real Estate Can Build Wealth — But Can It Help You Pay ZERO Taxes?
Yes, and we’re showing you how.

Join us on April 23 at 6:00 PM EST for a LIVE Zoom webinar where we’ll walk through Mike’s proven tax strategy—the exact steps he used to grow his portfolio and drastically reduce his tax bill.

You’ll learn:
- How to structure your investments for max tax benefits
- What mistakes to avoid when starting out
- Depreciation, cost segregation, 1031 exchanges & more
- How to scale without increasing your tax burden

Speakers:
Ashish Acharya, MAcc, CPA, CFP®
Mike Hyun, Real Estate Investor

Hosted by: Kinsley Botha, Marketing Lead

#RealEstateTaxStrategy #ZeroTaxes #PassiveIncome #FreeWebinar #TaxPlanning #RealEstateCPA #WealthThroughRealEstate #InvestorFriendlyCPA

The Augusta Rule (Section 280A of the IRS Code) lets you rent out your personal residence for up to 14 days a year without having to report that rental income on your taxes. That means tax-free money.

For business owners, this can be even more strategic:
• Rent your home to your business for meetings or events
• Deduct the rental expense from the business
• Receive the income personally—without paying taxes on it

Key compliance notes:
• Limited to 14 rental days per year
• Must charge fair market rent for the space

This is a powerful, legal strategy to reduce business taxes and build personal wealth—especially when documented properly.

@Jeremy England If a retired senior uses a HELOC (Home Equity Line of Credit) to invest as a private lender, the returns they earn are generally treated as ordinary interest income, not capital gains—so the 20% capital gains tax rate does not apply.

Here’s the breakdown:

• Borrowing the HELOC isn't a taxable event—it's a loan, not income.
• The interest earned from lending the HELOC funds (e.g., through a promissory note or real estate deal) is considered ordinary income, taxed at the investor's regular income tax rate.
• If the investor is on Social Security, this added income can impact how much of their Social Security benefits become taxable (up to 85% of it can become taxable depending on total income).

So even though the profit feels like investment income, the IRS treats it like interest income, similar to earnings from a bond or savings account—not capital gains. A proper tax strategy and entity structure (like an LLC) could help manage tax exposure and reporting, especially for seniors on fixed income.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Angel Edingfield When setting up your entity, it’s smart to consider both legal protection and tax efficiency—and since those overlap, the best move is to consult both a CPA and an attorney, or work with a firm that understands real estate-focused entity structuring from both angles.

Here’s a quick breakdown:

• For liability protection, an LLC is typically best for real estate. It shields your personal assets and is flexible for partnerships. You'll want an operating agreement that clearly defines roles, capital contributions, and profit splits.
• For tax benefits, you'll want to choose the right tax classification for your LLC—default partnership, or electing S Corp status if you're doing active business (like flipping or wholesaling). For buy-and-hold rentals, stick with partnership taxation to take advantage of depreciation and passive loss rules.

A CPA can help model your expected income, tax treatment, and entity setup, while an attorney ensures your legal structure and agreements are enforceable.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Andrew Tischbein You're on the right track, and yes—many first-time rental property owners are surprised when their rental shows a net income and still increases their tax bill. Here's what's likely happening:

Even though you made about $2K in net rental income, your tax liability depends on your total income, tax bracket, and how depreciation was handled. If you didn’t claim depreciation on the property (which is a major non-cash deduction), your taxable income from the rental could be overstated. For residential rentals, the structure (not land) must be depreciated over 27.5 years—this often wipes out net rental income on paper, especially in the early years.

Also, placing the property in an LLC doesn't reduce taxes—it's primarily for liability protection, not tax benefits, especially if you're still filing under a single-member LLC or partnership. For now, keep reporting it on Schedule E, ensure you're properly accounting for depreciation, interest, insurance, repairs, and other deductions, and consider amending if depreciation was missed.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Scott Stuart You're mostly correct—since the cabin wasn't placed in service (available for rent) in 2024, you can’t deduct most expenses yet, but you can capitalize them into the property’s basis. Here's how it works:

What you can’t deduct in 2024:

• Material costs, utilities, land loan interest, and construction-related expenses all get capitalized into the cost basis of the property, and you'll begin depreciating them once the STR is placed in service (likely mid-2025).

What you can deduct or capitalize in 2024:

• Miles driven to the property for construction should also be capitalized into basis—not deducted in 2024—since they’re part of the build effort.
• LLC setup costs (like filing fees and legal costs under $5K) can usually be amortized over 15 years.
• Startup costs (pre-rental expenses not tied directly to construction) under $5K may also be amortizable.

Land cost is not depreciable but is included in total basis and used to allocate depreciation for the structure only.

In short, you won’t get deductions in 2024, but you’re building basis now that will support depreciation and long-term tax benefits once the cabin is available for rent. Keep detailed records and receipts—your 2025 return is where the tax benefit really starts. Let us know if you’d like help organizing those costs to start depreciation cleanly next year.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Andrew Wilson Yes, for a valid 1031 exchange, you are required to use a Qualified Intermediary (QI)—a third-party company that holds the proceeds from the sale of your relinquished property and facilitates the exchange process. You cannot receive or control the funds directly, even temporarily, or the IRS will treat it as a taxable sale, disqualifying the 1031.
So, no—you cannot simply open a separate bank account and have the title company wire the funds there. That would be considered constructive receipt and would invalidate the exchange.
The $1,000 fee you mentioned is standard and well worth it to preserve the tax deferral. Just make sure you work with a reputable QI who will also help guide you through the timeline (45-day identification and 180-day closing windows) and proper documentation.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Susan K. Since your Florida LLC elected to be taxed as an S Corp and was active (even if unused) in 2024, you're required to file a Form 1120-S for 2024—even if there was no income or activity. However, since the dissolution occurred in April 2025, the "final return" box should be marked on your 2025 return, not 2024.

So here's what you need to do:

• File a 2024 Form 1120-S and issue K-1s (even if all zeros)
• File a 2025 Form 1120-S next year, marking it as the final return
• Ensure you file any final state filings or account closures with Florida
• If you filed an S Corp election (Form 2553), no further action is needed unless revoked

Even with no activity, the IRS still requires these returns to maintain compliance and close the entity properly. Let us know if you'd like help filing a zero-activity return quickly and accurately.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Harish M. If the seller isn’t interested in a 1031 exchange, there are still several strategies to reduce or defer capital gains tax:

1. Installment Sale (Seller Financing): Instead of receiving the full sale price upfront, the seller can spread the gain over several years by carrying a note. This defers taxes and may reduce the overall tax rate if income is spread into lower brackets.
2. Opportunity Zone Fund: If the seller reinvests the gain into a Qualified Opportunity Fund within 180 days, they can defer taxes until 2026 and potentially eliminate gains on the new investment if held long enough.
3. Charitable Remainder Trust (CRT): The seller could transfer the property into a CRT, which then sells it tax-free. The seller receives income from the trust and a partial charitable deduction.
4. Partial Gift to Family or Charity: If estate or philanthropic planning is a goal, gifting a portion before the sale could reduce the taxable gain, though this must be carefully structured.
In many cases, an installment sale is the simplest and most practical solution, especially if you’re open to structuring creative financing. A tax advisor can run scenarios to quantify the seller's savings.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Kalyan Kumar To deduct medical expenses, you must itemize your deductions instead of taking the standard deduction (which is $29,200 for married filing jointly in 2024).
Medical expenses are only deductible to the extent they exceed 7.5% of your AGI—so with a $150K AGI, only medical costs above $11,250 are deductible. You said you have $16,000+ in medical bills, so about $4,750 would be deductible.

However, for itemizing to be beneficial, your total itemized deductions (medical, state/local taxes, charitable donations, etc.) must exceed the $29,200 standard deduction. If you don’t have mortgage interest, property taxes, or other large deductions, your total may not cross that threshold—so even though you have deductible medical expenses, you might still be better off with the standard deduction, which is why your tax consultant said you can’t “use” the medical bills.
Unfortunately, you can’t just deduct the medical bills alone unless your total itemized deductions exceed the standard. A CPA can run both scenarios to see if it changes your tax due, but based on what you shared, itemizing may not lower your tax liability enough to offset the $9,000 you owe. Let us know if you’d like a second look—we can help model both approaches.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.