All Forum Posts by: Bonnie Griffin Kaake

Quote from @Sergey A. Petrov:

Very much trust my CPA of many years but had to go look at our returns! Our STRs are not on Schedule C so I suppose we are out of trouble. Ours are passive, professionally managed by someone else and we are fully hands off…

 Maybe, as long as your CPA has depreciated the STRs, whether they are passive or active, over 39 years, NOT 27.5. 

STRs can be a bit tricky from the tax filing perspective. Most STR depreciation schedules are not being done correctly and can be low-hanging fruit for the IRS. Let me know if you are interested in getting a recently published Q&A document for CPAs and investors. No cost, we believe an informed investor and informed tax professionals are important in this fast growing area of RE investments. The IRS' Audit Guide for STRs is not the last word. There has been much case law that followed that document.

Quote from @Greg Cook:

We are looking to have a cost segregation on our newly purchased STR. Does anyone have any recommendations for companies they have used?

I can get you as many references as you would like. Let's talk and get you a pre-analysis. You will not be disappointed. 

@Wendy Stclair  You are wise to get more than one estimate and realize it is not always the cheapest study that should get your business. The cost of an audit is not inexpensive. Look for value and be sure you are getting an engineering-based study, not a "desktop" study or "rule of thumb" study. Of course, if you like spending time with auditors, go for low cost. ;-) 

Quote from @Korey Harmon:

To all of the commercial investors, what are some things you wish you could delegate to someone else? I want to learn ways I can provide value to others but I don't know what issues commercial investors face.

Hi Korey, I have been on both ends of the commercial real estate deals, as an investor and as a now inactive commercial broker. I only wish I knew then what I know now as far as tax benefits available to investors. The RE agent/broker that understands the benefits available to their clients and who to refer a client to that has the knowledge and experience to keep the IRS red flags at bay, will add immense value to their services. I teach both CPAs and RE agents/brokers how to leverage this to their advantage.  

Quote from @Christina N.:

After completing my taxes this year for my 2 rentals (just purchased last year), I have capitals gains that are affecting my taxes with my husband and our W2 jobs. We have a long term amd short term rental in a LLC in Idaho while living in Ca. We make over 300k together without the properties. We talked to a tax specialist that stated the best way to structure our properties on these capital gains is to put our properties in non-grantor trust and create a foundation. By putting the captial gains in a foundation and donating 5% to a charity, we would eliminate the pass through income gains. My husband and I are trying to find the best way to structure our properties as well as research this strategy so we can continue to puchase more properties in the future. I am having a difficult time finding more information about this since it is pretty complicated. Has anyone heard of this or know of anyone we could talk to for a second opinion?

You are talking about some technical tax strategy here. I would highly recommend finding a good tax attorney first and get a second opinion. I have one if you need a reference. You would also benefit by getting an estimate for cost segregation on both of these properties if the purchase price of each was over $250K. This would likely off-set the passive income on each and not your W2 income. This is because you will not likely be materially participating in the STR and are not RE Professionals. You definitely need a second opinion for a tax attorney familiar with real estate investments and trusts.

@Chris Seveney  Once you get a pre-analysis/estimate (no cost), you will know exactly how you will benefit or if it is not worth pursuing. In most situations, single family rentals and condo rentals included, you can usually expect 6% to 8% of your purchase price minus land in after-tax cash-flow. Every property is different, as @Julio Gonzalez also mentioned. Cost segregation is rarely of no benefit. The exceptions are your purchase price was very low, you pay nothing in taxes, or are going to sell the property in a year or two. Even if you intend to pass the property on to your heirs, you can do cost segregation now and never have to pay any of it back in recapture taxes. AND, your heirs can do cost segregation on their new step-up in basis.  

Quote from @Gabriel Litvack:

Hi, I'm a real estate investor in New York and I'm looking to do cost segregation on my properties. 

does anyone know how can I do it myself and if is there any app that walk through the steps of the cost segregation study?

thank you

You may find the better cost segregation firms that have more experience and do engineering-based studies are not based in your state. Local is not always the best. Get quotes for quality engineering-based studies and decide by what they are offering you other than lowest price. Would you want to buy a car based on the lowest price? How about flying in a plane that was built by the lowest bidder? 

@Vicki X. I would do so real hard investigating...check out their current house, talk to neighbors, their credit rating and then think again. I am ok renting to owners of one dog, maybe 2 small dogs. I made one exception for my grandson's girl friend with two big dogs, German Shepard and a yellow Lab. They didn't pee or poo anywhere but the younger lab chewed the furniture and two of my rugs. The apartment is pretty dog-proof but for me, no more big dogs.  

Quote from @Eric Gorostiza:

Hi everyone,

Just closed on my first rental property (new construction), wondering what everyone's thoughts are on obtaining a cost segregation study for my property. I'm not 100% sure if I will qualify to be a real estate professional this year, but doing the study seems beneficial either way. What have you all done?

Thanks,

Eric

Hi Eric, You do not have to be a RE Professional to benefit from a cost segregation study. You can usually count on about 6-8% of your purchase price in after-tax cash-flow...taxes you do not have to pay. If you can't use all the benefits in year one of doing the study, you can always roll the benefits forward until they are exhausted. Your best option is an engineering-based study unless you don't mind spending time with auditors. ;-)  Estimates are at no cost and give you the information you need to decide how it can benefit your tax situation. Beware of companies that over-promise and under-deliver. Experience and audit protection are important.