All Forum Posts by: Greg O'Brien

@Curtiss Ray your CPA should be able to correct this as there are several issues:

1) If a MGMT entity has a valid business purpose (borderline with 1 property) you would not lease your property to it. You would have a FMV services contract/mgmt contract in place. So if thats 15% of rents on 1 property, it might be pretty small IMO.

2) You might be confusing a couple topics but the distribution from an S corp in this situation is not passive. Its “nonpassive”. It is however not subject to FICA (I assume thats what you were getting at).

@Eliott Elias if you want a tax strategist you need to search for them up front, as they are out there.

Some CPAs file taxes, some cater to ultra HNW tax strategy, some audit fortune 500, some perform government audits etc. Its a broad designation with hundreds of sub niches.

One great question would be asking the ratio of Staff to Clients.

If a staff is handling 20 vs 200 clients, you may get a better idea about the level of proactive advice you’ll receive…

@Simon W. Id agree almost no RE investors use accrual (for tax) unless they are forced to. For book, it may give better insights but cash so far more flexible

@Tommy Cheng see link I posted, hopefully that clears it up

@Tommy Cheng

https://www.biggerpockets.com/forums/530/topics/1056436-clearing-up-confusion-on-tax-treatment-of-short-term-rentals

@Jarred Bundy all 3 must be met. The items you mention MOSTLY qualify. Be careful of financial items or “investor hours” and travel.

Think this way: "If I did not do this (Insert Task) would be STR be negatively affected"?

For ex, is it necessary to visit 5 times per week to mow the lawn? Most reasonable people would say no (including the Tax Court and IRS)

@Jon Fletcher dont forget HTCs are likely Passive Credits as well (unless the activity is nonpassive to you). Ive seen some get trapped here.

@Christina Hall unfortunate this time of year.

Most STR niche CPAs aren't taking on clients this time a year but fortunately you can always extend your returns into the summer

@Mitchell Maginnis as others have said, there are lots of threads on this. Search for “Clearing Up Confusion on Short Term Rentals”. We did a thread clearing up the FAQs this summer as many CPAs/Tax pros were not treating them correctly and everyone has the same questions.

In short, yes its possible. We’ve been specializing in STRs for a few years and have seen multiple clients succeed when there is a plan in place and they navigate IRC 469 properly.

@Todd Goedeke agreed, the doctor analogy is one we have to everyday! Finding RE specialists who are hopefully investors themselves will likely lead to a better ROI for all