All Forum Posts by: Bernard Reisz

@Chris Bird It can make sense in so many scenarios, but always requires an awareness of all the moving parts and, occasionally, a crystal ball. But, in the absence of a crystal ball, decisions require a combination of nuanced, objective tax expertise, along with some subjective convictions regarding the future.

A 1031 exchange will allow you to, generally, sidestep depreciation recapture. But, will the exchange be successful? Can you buy another property and use cost seg to bonus depreciate and offset income/gains? Possibly, but tough to know today, with certainty.

@Michael Plaks I've been absent from BP for a while and your incredible post def made it worth visiting! (Although you could have just posted the whole thing in REI Tax and Legal Wizards!😉)

P.S. Can we get you to add something here about the interaction between cost seg and installment sales? 

@Christopher Boon I should add that as a NY investor, you should ensure that whoever you use is very familiar with NYS AND NYC tax & legal regimes. NY is one of those states that has more than its fair share of idiosyncrasies. In fact, the LLC-Management Structure video referenced above relates to exactly something of that nature.

@Christopher Boon I've, actually, deemphasized "traditional" tax services to focus on consulting and delivering more specialized services (1031 Exchange, Self-Directed Retirement Accounts, entity structuring, etc.). I do lots of advisory, but am not taking new tax preparation work. I would strongly encourage reaching out to @Michael Plaks and @Daniel Hyman, among others. No two true tax pros are alike, but what they all have in common is a commitment to providing you with tailored and honest service. I also encourage some caution with regard to promoted marketing webinars on tax and legal topics. As much as I wish true tax and legal services are scalable and can be mass marketed, experience has shown that is seldom achievable.

@Daniel Hyman Honored by the mention! TY!

@Bobbi Casalino In an effort to deliver free and objective info regarding real estate tax and legal topics, recently launched an education portal. Some recent content includes:

- Nevada LLC Fact Check

- Texas (Series) LLC Fact Check

- Wyoming LLC Fact Check

- LLC Management Structure: Real Life Mistakes To Avoid (fyi, this relates to the idiosyncrasies in NYS LLC law)

- Split Interest Trusts

- Too Much Estate Planning

- How To Save on Taxes With an S-Corp... Sometimes!

There's extensive info and straight talk on real estate investor tax & legal topics that will be helpful to you, whatever route you choose.

@Abel Curiel Always great to "hear" from you and honored by the mention! @Christopher Boon In an effort to deliver free and objective info regarding real estate tax and legal topics, recently launched an education portal. Some recent content includes:

- Nevada LLC Fact Check

- Texas (Series) LLC Fact Check

- Wyoming LLC Fact Check

- LLC Management Structure: Real Life Mistakes To Avoid

- Split Interest Trusts

- Cost Segregation Shenanigans (ridiculed by the incredible @Michael Plaks) 

There's extensive info on lots of straight talk on real estate investor tax & legal topics that will be helpful to you, whatever route you choose. 

@Steve C. To provide tax benefits, and not tax penalties, a QRP has to be "Qualified." To be Qualified it must meet the definitions of the Tax Code in formation and operation. Having a set of IRS approved documents is only 1 small part of a plan actually being "qualified." Therefore, those for whom subscribing to get a set of IRS approved QRP documents would not result in a Qualified Retirement Plan may be better served by using an SDIRA. Of course, no tax is better than a little tax... but a little tax is better than a lot of tax. 

@Steve C. The determining factor regarding what type of self-directed account to establish is very seldom UBIT. In addition to great info provide by @Brian Eastman, following are some common fallacies encountered and, sometimes, widely disseminated.

• Qualified Retirement Plans (abbreviated to QRP and, for purposes of this post, includes "Solo 401k") are exempt from all UBIT. UBIT applies to all tax-sheltered vehicles. QRPs have an important - but limited - exemption for "real estate acquisition indebtedness" and, very importantly, that exemption is not always applicable.
• The tax rate on UDFI is 37%+. The effective tax rate will usually be far, far lower due to the way it UBIT is calculated. In fact, in many, many instances UBIT never materializes until the asset sale. If-and-when applicable to a sale, the tax rate that applies is the far lower cap gains rate, not trust rates.
• The key factor in selecting a tax-sheltered self-directed retirement account is UBIT. This is erroneous because (a) a non-compliant QRP can result in far more adverse consequences than UBIT liability and (b) UBIT coming from UDFI does not override the financial benefits of using an SDIRA to invest in real estate. 

There are a plethora of self-directed retirement account vehicles available, each of which has its place. It's just a matter of making well-informed choices to get the best results for yourself.

I have heard of sellers of self-directed retirement plan documents that "qualify" folks as "self employed," for purposes of sponsoring a 401k, by signing them up as affiliate marketing partners. Of course, something of that nature should be always be discussed with an objective professional.

@Brian Eastman Don't you believe in the adage "you get what you pay for?!" 

(Couldn't resist injecting some humor here. Great post by you, as always!)