All Forum Posts by: Ashish Acharya

@Justin Summers Yes, your mother can still claim the mortgage interest deduction since she holds legal title and makes the payments, even though the 1098-INT is issued to the prior owner. Ideally, the prior owner should issue a nominee 1098 to your mother and include a statement with their return noting her as the interest payor. If that’s not possible, your mother should attach a brief statement to her return explaining that she holds title and made the payments, while the 1098 was issued under the seller’s name. This creates a paper trail to support the deduction.

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.

 @Julio Gonzalez Thanks so much, Julio! Glad you found it helpful.

@Sweta Jain You don’t need to amend your 2022 return if the only issue was entering “0” for the AMT passive loss carryover and it didn’t affect your actual tax liability. The AMT carryover is tracked internally by TurboTax and isn’t submitted to the IRS via Form 8582 or Schedule E unless AMT was triggered. You can simply correct the AMT carryover number in your current TurboTax return for 2023 to ensure it calculates properly going forward. Keep the corrected worksheet for your records, and you should be good to go.

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.

@Seamus Cronin Yes, you're generally allowed to net rental income and losses across properties for federal tax purposes, which is why your federal return shows zero rental income—your New York losses offset your Ohio gains. For Ohio state taxes, you start with federal adjusted gross income (AGI) as the baseline, so if your federal rental income is zero, Ohio also sees zero rental income to tax unless there are state-specific adjustments.
Ohio doesn’t require you to isolate in-state rental gains if your federal AGI already nets them out. So, if your net rental activity across all properties is a loss federally, you generally don’t owe Ohio income tax on the Ohio rental property—even if it generated income on its own—because the state follows federal treatment for pass-through rental income.
Still, it’s smart that you’re filing an Ohio return to report the activity, even if no tax is due. Just keep documentation in case the state questions the allocation.

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.

@Sylvia Castellanos Electing S corp taxation for your LLC can offer significant self-employment tax savings, especially if you earn over $40K annually. You're correct that you'll need to pay yourself a reasonable salary through payroll (with tax withholdings and filings), while the remaining profits can be taken as distributions not subject to payroll taxes. Unlike a traditional S corp, an LLC taxed as an S corp doesn't require a board of directors or formal meetings, but you will need to file Form 2553, run payroll, and file an annual 1120-S return with a K-1. The key benefit is tax efficiency, but it comes with added compliance, so it's smart to consult a CPA to ensure it's structured and maintained properly.

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.

@William C. If you and your spouse earn $300K in W-2 income and operate a short-term rental (STR) with average stays under 7 days, actively participate, and run a cost segregation study that creates a $60K loss, that loss can offset your W-2 income—even without qualifying for real estate professional status. This would reduce your taxable income to $240K. Assuming a combined federal and state tax rate of ~38%, you'd save around $22K–$24K in taxes—not the full $40K you currently pay. Any unused portion of the loss can carry forward to future years to offset STR or other non-passive income if material participation continues.

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.

@Mahender Bist Unfortunately, depreciation losses from a real estate syndication (via a K-1) are considered passive losses, while stock gains—whether short- or long-term—are considered portfolio income, not passive. Under IRS rules, passive losses generally can’t offset portfolio income, including gains from stocks.

Unless you qualify as a real estate professional or meet specific exceptions (like material participation in a short-term rental), those losses will carry forward and can only be used to offset future passive income or gains from the sale of the syndication interest. That said, those carryforward losses still have value in future years.

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.

@David Zimmer Great structure—and it sounds like you’re building a solid partnership. When it comes to sharing tax benefits like bonus depreciation, the key thing to understand is: tax write-offs follow ownership percentages unless otherwise specified in a formal entity and operating agreement.

Since you're not using an LLC (yet) and likely filing as tenants in common or a general partnership, the IRS will expect all income, expenses, and depreciation to be split based on your actual ownership shares, not a side agreement.

So, no—you can't simply write a private agreement to “split the tax savings” after filing. That would not be supported in an audit. Instead, you’d need to:

1. Form an LLC or partnership and file a partnership return (Form 1065).
2. Draft an operating agreement that allows for special allocations of depreciation (e.g., 70/30 on depreciation, even if ownership is 50/50), which is legal under Section 704(b) rules if done properly.
3. File using the K-1s reflecting the agreed allocations.

If you don't go this route, you'll each only be able to claim depreciation based on your ownership % and subject to your individual income limits and material participation status (especially if using the STR loophole).

If your partner's income is higher and he's more likely to benefit from bonus depreciation, a custom allocation in an LLC is the cleanest way to structure that.

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.

@Mariah Pierce Whether to move Roth or Traditional funds into a Self-Directed IRA (SDIRA) depends on your tax goals. Roth SDIRAs offer tax-free growth and withdrawals, making them ideal if you expect significant gains from your investments. Traditional SDIRAs are tax-deferred, giving you more capital to invest now but resulting in taxes upon withdrawal. Since you have $80K in Traditional and only $25K in Roth, you might start with Traditional and consider converting to Roth later if you can lower your income or tax bracket using real estate tax strategies—such as cost segregation, bonus depreciation, or the STR loophole. If you believe the market will dip soon, moving Roth funds now could let you capture future gains tax-free.

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.

@Nicole Cotrino You're correct—if your short-term rental has average stays of 7 days or less and you meet material participation, you can report the income and losses on Schedule E without being a real estate professional. There’s no separate IRS form to establish material participation—you simply check “Yes” to material participation on Schedule E and keep a detailed log of hours to support your claim. You do not need to use Schedule C unless you're providing hotel-like services (which would trigger self-employment tax).

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.