All Forum Posts by: David Zimmer

@David Zimmer Great structure—and it sounds like you’re building a solid partnership. When it comes to sharing tax benefits like bonus depreciation, the key thing to understand is: tax write-offs follow ownership percentages unless otherwise specified in a formal entity and operating agreement.

Since you're not using an LLC (yet) and likely filing as tenants in common or a general partnership, the IRS will expect all income, expenses, and depreciation to be split based on your actual ownership shares, not a side agreement.

So, no—you can't simply write a private agreement to “split the tax savings” after filing. That would not be supported in an audit. Instead, you’d need to:

1. Form an LLC or partnership and file a partnership return (Form 1065).
2. Draft an operating agreement that allows for special allocations of depreciation (e.g., 70/30 on depreciation, even if ownership is 50/50), which is legal under Section 704(b) rules if done properly.
3. File using the K-1s reflecting the agreed allocations.

If you don't go this route, you'll each only be able to claim depreciation based on your ownership % and subject to your individual income limits and material participation status (especially if using the STR loophole).

If your partner's income is higher and he's more likely to benefit from bonus depreciation, a custom allocation in an LLC is the cleanest way to structure that.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Bad deal. There are so many things you haven't mentioned at all it seems like you really haven't done any research if I'm being honest. You won't break even each month. 

Multiple tenants equals multiple cars. How are you expanding the single car driveway and carport?

 I re-read this and it sounded negative, and I truly don´t mean it to come across that way.  The deal looks like it could be great.  

But especially right now in a shifting market there are a lot of people who are hurting because they used comps for the monthly income without totally understanding that we have had a pretty spectacular run post covid and that the true market might not be there like that for much longer.  

It is why I would argue for hyper conservative numbers especially on the revenue side in almost all markets.  There are still going to be deals that make sense using this method and then you have simply bought yourself some extra wiggle room if things get a little hairier than expected. 

From the info you provided and running the property through Airdna, this is a bad STR deal! Your COC is -13% and the occupancy is terrible at 37%! Unless you want a LTR or plan on moving in personally, I would not buy this property.

Hey @David Zimmer, have you looked into LTR the small apartment for steady income and a possible watcher and minor maintenance for the 3/2?

A quick look showed 1/1's going for about $1600 in Tallahassee. That matches your first estimate. No real work involved with that unit, then STR the 3/2.