All Forum Posts by: Bonnie Griffin Kaake

@Tayvion Payton  The biggest lesson I learned in my industrial property and retail property investments was to pay close attention to the tax benefits available on a property. I left a lot of money on the table because my CPA was not familiar with accelerated depreciation at the time. I now work in the field of tax benefits and cash flow for owners of commercial properties and residential rentals for purchases of $250K to over $2.5 Billion. 

I recommend you get a pre-analysis on the tax benefits available to you on a particular property either as soon as you identify a property or once you have closed on it. On the size property you will be looking at, you can expect about 6 to 8% of your purchase price in upfront tax benefits that will help you do any renovations you need to do or invest in another property. If you need more information, let me know. 

@Cliff Benner and @Mitchell Gunlock  The very best place to find RV parks for sale are at trade shows. I exhibit and talk at them about available tax benefits and cash flow that too many miss. At the last show I attended, our booth was directly across from a RE broker of RV Parks. Let me know if I can be of help. 

Quote from @Matthew Drouin:

@Bonnie Griffin Kaake all of those will be on the table and be rigorously discussed as we chart our way forward.  I'm friends with one of your colleagues at CSSI Brenda Reding.  You guys are the best!

That is good to hear. Too many investors are not aware of the tax benefits and extra cash flow that could be theirs. Thank you for your kind words, Matthew. I am sure Brenda will do a great job for you. 

@Michael Doherty and @Mike Auerbach and @Ellen Steele Don't forget the additional tax benefits available with cost segregation on the new basis as well as 179D. The 179D benefits can be available if this is a commercial building you are exchanging into. 

@Matthew Drouin Are you aware of the tax benefits and cash flow opportunities with 179D and the use of Green Zip Tape as well as cost segregation on this build-out? This could save you as much or more than 10% to 17% of your (purchase price plus construction costs) up front. Let's talk if you want more information. You may not have to jump through the hoops you have been jumping through to get the results you want. 

Quote from @Marcus Auerbach:

Getting a FincenID makes it easy if you have more than one or expect future updates. 

I don't quite understand the pushback. 

It blows my mind that you can actually start and operate a legitimate business in the US without telling the government (not the public) the name and address of the owner. I mean, how shady is it to object to that? Do you object to giving them DMV your address Or your bank?

I understand some of the issues and I believe those can be adjusted to be sure we are not penalizing some of the small investors. On the other hand, if you ever had a spouse or ex-spouse who was hiding assets in LLCs you might understand the need for more transparency in these transactions. Then again, maybe that is why some investors don't want this level of transparency.

I am not sure what state @Camille T. lives in but I don't know of a state that currently has this level of transparency. Years ago as a commercial RE broker, I once had a client try to close on a commercial property using cash. He had to go to a bank and get a cashiers check. The title company would not accept cash. Money laundering is a big concern and needs to be addressed. 

Quote from @Todd Foust:

*Advice. 

Hey team,

I have a unique combination of tax situations, and I am trying to identify an appropriate CPA. Here is my issue: 

- I live in South Carolina

- My W2 and primary income is from company in North Carolina

- I'm starting a real estate rental business in Illinois

I started looking for CPAs to help and figured I'd start with accountants in South Carolina but so far everyone I contacted simply responded with "not taking new clients". I wonder if that is a graceful way of saying I cannot help you with your taxes in Illinois as I'm only license in South Carolina?

Questions

1. In order to get a CPA, would they need to be licensed in all three states in order to help me both with Personal and Business taxes/accounting needs? If this is a requirement, feels like odds would be low to find a match? 

2. Should I instead just try to land an accountant in Illinois and JUST ask them to do the accounting and taxes for the business only, then I'll just tackle the personal taxes like I have always done? 

3. Third idea was to see if TurboTax may still be able to tackle my scenario. Anyone use TurboTax to help manage the business taxes and returns, depreciations, tax benefits etc? 

Thanks for any advice or experience you can share. 

-Todd

 I would not recommend trying to use Turbo Tax for your situation. What is more important is that you find a CPA/EA/tax professional who is savvy about real estate investments. Then, work with a tax benefits and cash flow strategist to maximize your benefits for investment real estate. You don't need someone in your own state now-a-days. Tax professionals who are savvy about investments in RE are far and few between. There are simply not enough graduates choosing to be CPAs/EAs/tax professionals. There are some good ones on BP as well as those of us who are tax strategists who can maximize your tax benefits and increase your cash flow. We work with your tax professionals to your benefit. 

 @Eric Carlstrom

Regarding taxes, be sure you are not paying too much and that your CPA/tax professional is up-to-date on the regulations. I see too many depreciation schedules done on 27.5 day depreciation schedules for STRs. This is a red flag for the IRS. All short-term rentals of less than an average of 30 days per year belong on 39 year depreciation schedules.

You can only occupy your STR 14 days per year and not more than 10% of the actual rental days by tenants. You may be better off renting another property for your own vacation stay than staying in yours; why put up a red flag for the IRS?

There is another tax benefit you may not be leveraging. Get a no-cost estimate for an engineering-based cost segregation study on every investment property you own over $250K in purchase price. You are likely leaving thousands of dollars in tax benefits and cash flow on the table. I am available if you have questions or need a study. 

Quote from @Sean Nava:

I have a strong feeling that our market will replicate california soon. The rental increases and equity growth makes our  market very forgiving. Which is guiding my decisions. 

I looked into buying in the Midwest for cash flow but I couldn't help to notice that people are selling homes for $6,000 more than they bought the homes 8 years ago. So one major repair can wipe out a year's worth of profit. Especially with a newer investor such as myself.

This has steered me towards buying locally. I am more interested in the wealth growth from equity. 

I am currently closing on a duplex that will be cash flowing only $150/mo to start but will build rapid equity. Which can be used to later to buy more properties. Or refinance for spending cash when it come time to retire.

The advantage you have living locally is that you can buy a new primary residence every few years and keep the prior home for a rental.

Good luck. Either choice you make will be a good one. Just make sure you take action.

 @Sean Nava  If you haven't considered a cost segregation study yet on any of your investment properties, you are leaving a lot of money on the table. You will usually have about 6-8% of what you purchased the property for in taxes you won't have to pay in the first year or few years. This could give you the extra cash flow you need to make repairs or upgrades to the properties you purchase or enough to buy another property. Stop paying more in taxes than you need to pay! If you have questions, I am here to help. 

 @Thomas A. Rufo Also consider the fact that when you switch from STR to LTR or the other way around, you will need your CPA/tax professional to do the IRS' 3115 change of accounting form to go from 39-year depreciation for STR to 27.5-year depreciation for a LTR. They do not like doing these complex forms and charge quite a bit for them. If you haven't done so, you may want to get an estimate for a cost segregation study on these units. This will give you extra cash flow in the first year and/or the early years to maximize your tax benefits and make your dream come true. I provide the 3115 and 481a adjustments for my clients and their tax professionals with the cost seg studies.