All Forum Posts by: Bonnie Griffin Kaake

@Jerry Pfeiffer

Since you inherited the commercial property, you did so at the current market value. This means you can do a cost segregation study on it and maybe other tax benefits as well. This can increase your cash flow for the other purposes you mentioned. You likely have more cash flow available than you may realize. 

Too many RV Park and Mobile Home Park owners are unaware of the tremendous tax benefits available. It could be as much as 30% of the basis (construction minus land) in the property. Are you aware of how to get these benefits for yourself? Do you know how the new BBB will change the availability of tax benefits for these investments?

Seems to be a lot of mis-understanding about what the return of 100% Bonus Depreciation really means. The 100% Bonus Depreciation is ONLY available for purchases AFTER 1/19/25 going forward with occupancies AFTER January 19, 2025. 

If a purchase was made or construction started before 1/19/25, the investment applies for whatever Bonus Depreciation was available in the year of occupancy. If the construction started in 2024 and property became occupied in 2025, the Bonus Depreciation is NOT 100%.

#BonusDepreciation #100% #RealEstate #Investments #TaxBenefits #misunderstanding #RealEstateInvestors

When you compare a STR to a LTR on the same property, you will find that the STR usually has a better ROI. Nevertheless, the amount of work that goes into a STR to qualify as an active investment rather than a passive investment is far greater for the STR. It is your choice.

Of course, if you qualify as a RE Professional, both STR and LTR will be active investments.

Thank you for the complement. 

Over the years, I have been a commercial real estate broker and an investor primarily in commercial real estate. At this point in my life, I have divested from my commercial properties and currently have a mid-term rental. Each person's situation can be different. 

Because each person's investment goals are personal, it is to your advantage to be talking to a tax consultant to maximize your tax benefits and cash flow. Then, the consultant working with your real estate savy CPA/tax professional can guide you in what is best in your specific situation. 

Think of CPAs/tax professionals as your medical GP. They have a broad knowledge of their subject. When you have a broken leg or a heart attack, you will want a specialist whose knowledge is deeply focused on surgery or heart issues. As a specialist in real estate taxation, strategy and available cash flow opportunities, I work with your CPA/tax professional to maximize your benefits in this complex area of tax laws and regulations at no cost to you. 

@Renee Adams

STRs can be active or passive. It depends on how it is being used and how you are participating in the management of it. Here below are two reasons the STR can be passive instead of active:

1. If you are not actively participating in the management of the property at least 100 hours per year and more than anyone else or any other entity.

2. If the average of the year's rental days is more than 7 days. It does not matter how many days you actively manage the property, it is a passive property. 

@Henry Le Short-term rentals have very different and more complex issues for owners. I teach continuing education classes for CPAs to make them aware of these complexities. Too many investors and tax professionals do not understand how vulnerable they are to audit by not knowing what they don't know. Just two things that come up over and over again: 1. STRs of less than 30 days, must be depreciated over 39 years. 2. Even if it is a STR the actual number of rental days MUST be 7 days or less on average for the total number of rental days per year. This is even with 100+ hours of personal management and more than any other person or entity in order to qualify for active investment treatment. If the average is more than 7 days, it is passive rather than an active investment no matter how many days you personally manage that property.

Contact me if you need additional information on tax benefits and increased cash-flow.   

@Jeff Flanigan Are these townhomes being built for sale or for lease? If they are going to be leased townhomes, you may have as much as $30 per sq ft in special tax benefits. If they are going to be purchased by individual investors, they can do cost segregation but it is not as lucrative. PM me if you have questions. I can offer both. 

 The only thing I see you missing is no mention of the tax benefits and extra cash flow available with a good cost segregation study for each of your properties. 

@Priyanka Verma  Short-term rentals have some unique challenges and opportunities. First, they need to be depreciated over 39 years, not 27.5 like most residential rentals. Second, if you are actively managing the property, more than 100 hours per year and more than any other person or entity, it can be considered an active rather than a passive investment and allows you to take cost segregation "losses" off your income for tax purposes. 

Look for a knowledgeable CPA/EA with a good grasp of real estate investment benefits that are available to you. Cost segregation is a big help, especially in the first years of ownership when your cash flow is more challenged. Cost seg increases your tax benefits and cash flow. 

Let me know if I can be of assistance.