All Forum Posts by: Chris McCormack

It’s probably worth looking to another CPA who’s well versed in real estate and cost segregation. The cost seg estimates are free and a qualified tax planner would be able to see whether you’re able to capitalize on the benefits. Have you received an estimate from a cost seg expert?

I agree with all of these responses - especially @Dave Foster with the CRT. BUT these are complex and not for everyone (with strict requirements and costs) and you should consult with a CPA / attorney.

Easy Fix: Marry a real estate agent ;)

More than anything you want real estate specific on both the bookkeeper side and CPA. Whether they come from one company or multiple, find those with real estate niche.

There is also new legislation coming out known as the Corporate Transparency Act that will require more transparent reporting of ownership (i.e. more work required on the upkeep side). All in all this is a legal discussion that should be covered with your lawyer.

Having multiple LLCs requires multiple steps of upkeep. You'll want to make sure whoever you turn to for advice will help you ensure you're keeping up with all legal requirements and not incurring unnecessary penalties and fees.

@Ali Hashemi There may not be much you can do about writing off your 150k in income but you probably have a lot of passive activity loss carryforwards which can be used to generate tax free income elsewhere. Are you working with a real estate tax strategist? A lot of accountants will miss this or count you SOL.

In reference to your question about those who don't pay taxes - they're probably not generating the same type of income as you. Where you have W2, they have it all in real estate which allows you to generate active losses.

They consider a lot of things when determining how to classify such income. Included in those considerations is frequency of transactions and intent. 1 is arguably few enough to not consider it ordinary but if it's 1 per year and the IRS sees you're doing it mainly to avoid taxes it could cause problems. I agree to meet with a tax planning CPA to discuss options. 

Are you working with someone @Derek Whitener

I would focus on the real estate specific strategists and those who will work with you year round as your situation continues to change.

This is similar to asking when should you fix the check engine light on your car or when should you get surgery to remove a tumor? Chances are you're in need of some advanced tax strategy and it's best to fix the problem (or get out in front of it) sooner rather than later. This is what a qualified RE tax pro provides.