All Forum Posts by: Jason Watson

Sorry to be this guy... but what a client hopes or expects is a product of poor or non-existent tax planning. Far too many taxpayers draw up their tax return in their head without a real plan. Or they talk to their bartender or produce clerk, and not their tax pro. Not saying this is the case... but with proper tax planning there should be zero surprises. Like none.

Is there a reason you want a local CPA? A dentist makes sense... but a local CPA? Solid advice broken down into 1s and 0s delivered to your door seems to work too.

Sure, all this sounds great. I recommend CostSegEZ.com. Effective. Intuitive. Reachable.

My go to referrals are New Directions and Equiy Trust.

Totally agree! Accounting packages such as QBO and others specific to property management are good, but they can also be like killing a housefly with a sledgehammer. It works, Yes, but was it necessary? Unlikely.

80% of our landlords use Excel or bar napkins or some combo. 60% of our small business owners are single-shingle "one man bands," and they too use Excel.

QBO, Waveapps, Freshbooks, Stalebooks, SloppyBooks, Xero, One and all the others are nice to have but not must haves until you have several rentals or complex rentals (such as a strip mall or something).

Yes, just like a car... "Your mileage may vary."

Piece of cake. You just relist the asset on your 1065 (Form 8825) tax return with the adjusted cost basis (the original acquisition cost with whatever depreciation you took on your 1040). There might be some differences with your capital account, however depending on some things.

But overall you just plop the asset with its adjusted basis and historical depreciation onto the new fixed asset listing of your partnership tax return. DM me if you want help or need to explore more.

"Beefy" Operating Agreements are generally needed if your entity has non-married partners or if you are using an LLC as a wealth transfer mechanism. If you and your spouse, or if you have a single-member LLC, then I recommend rocket lawyer or a discounted version.

I'll chime in. Rental A profits 15,000. Rental B loses 35,000. You would have a net loss of 20,000. No, you don't have to be a real estate professional nor does rental B have to an STR. They simply net together.

Whether the 20,000 loss is deductible depends on your income, and I can only assume that with a jumbo loan on your primary residence, you earn more than 150,000 modified adjusted gross income. If that is the case, then the 20,000 loss will be carried forward... unless REP or STR.

On the SALT question it depends on your state. A lot of states don't recognize rental income as net ordinary income, which is needed for the PTET deduction. Also, rentals in S Corps are generally bad should you want to revoke S Corp election one day, the assets are distributed at fair market value and likely will have capital gain without cash.

Alternatively, a multi-member LLC taxed as a partnership is considered a pass-through entity, and if your state allows SALT work-around / PTET on rental income, a partnership solves both issues.

We recommend partnerships often for rentals especially STRs.

Also, here is our firm's Real Estate Professional webpage... hasn't been updated in a few years. But it has each of the 7 material participation tests plus verbiage from the ATG. DM me your commentary or suggested edits.