All Forum Posts by: Joshua Thompson

They may be thinking about the qualified vs nonqualified use of the home and either taxing the entire gain or a portion of it. Though in general, their thinking isn't wrong, they may want to visit section 121 nonqualified use details. I agree with the above comments that depreciation recapture does need to be included. 

I can't say the tax balance is completely incorrect because A LOT of items can affect this number. I would respectfully mention your opinion and findings to them and ask for their thoughts.

Keep in mind if you are just now filing the 2022 tax return then penalties and interest could be increasing this number.

It's great to work with a real estate-specific tax professional but it's difficult because you don't always know what you don't know. For example are they making a major mistake? If this is the same person you've worked with for years and have a good working relationship I would first give them the benefit of the doubt and reach out to two other accountants to see if they will do a complimentary review of you previous tax returns. If all appears to be in order then there might not be any harm staying with HR Block. The downside is that a specific individual might not be there next year and you'll have to build a new relationship with someone that might not be as knowledgeable.

Best of luck!

Hi Anthony! I would highly recommend reaching out to some of the accountants you see active in the forum. BP also has a cool feature that allows you to find a real estate specific accountant. I believe you can click "Build Your Team" then select "Find a Tax & Accounting Pro" 

Good luck!

 Jagan, to be clear, many firms nowadays are remote and work with clients across the country. I think some of your best options are on this forum like Zachary above or others even if they aren't located in Virginia. To find someone local I believe BP has a find an accountant feature but not sure if it lets you filter to someone local. If that doesn't work I would go into a few local businesses and ask who they are using. Good luck!

Hey Robby, how have things been!? I can't say for sure if the BP calculator offers such a calculation as your tax situation impacts how the depreciation will effect your return.

By bonus depreciation I'm assuming you're referring to doing a cost segregation, if this is the case you'll definitely want to review your tax return to determine if you can even take advantage of a cost segregation. If your income isn't in a certain range or if you're not a real estate professional (amongst other items) the cost segregation might not be beneficial. This is assuming the value of the property makes sense to do cost segregation. 

If you use bonus depreciation (cost segregation) this year that will mean in future years you'll most likely have less depreciation for that property.

When to use bonus depreciation, section 179 depreciation, cost segregation etc. should be a conversation/analysis you have with your accountant either mid-year doing a tax projection or prior to your tax return being filed.

Good question!

Are you looking for someone local to northern Virginia, because we have offices in Iowa and Texas but have plenty of clients in Virginia, as well as other parts of the country. I would highly recommend interviewing at least 3 tax professionals to pick a firm that you feel comfortable with.

One thing you may want to think about when reevaluating is depreciation. Usually, depreciation will wipe out most of the rental income at the end of the year. You may need to file a CA tax return but may not have any income to pay taxes on.

Everyone's situation is different so depending on your situation you could have income to pay taxes on.

 A lot of them you can see to the right of this thread. Some are CPA and others are EA. Both can file your taxes just as well.

Hey Nick

I'm not a tax professional so you will want to also hear from the good professionals on here.

From what I've read it shouldn't be an issue if you're in a partnership and you want your partner to buy you out at your basis. From what I've read this doesn't usually create tax but you do have to determine what your basis is, as it may or may not be cut and dry as it sounds. 

Why would you want to do this? It almost seems like it defeats the purpose of investing in the first place.

If you're trying to do this as a gift you may run into the issue of a bargain sale.

Also, depending on your situation and further details could change the answer.

Would love for any of the professionals to let me know if they agree or disagree!

Originally posted by @Cody L.:

Originally posted by @Joshua Thompson:

Originally posted by @Cody L.:

If it's a deal you can easily flip it to someone.  

It's a few properties. Would you recommend trying to sell one or two, wholesale, or buy and hold? Like I said Houston is not my market.

Personally?  I'd get all of them.  While there are some buyers who will pass on anything that's too big, there are also people that will pass if it's too small to mess with.  So given both options will leave some buyers on the sidelines, go with the option that'll make you more money. 

Obligatory: 

I think it's worth giving a shot at. 

What will anyone else do if they decided to move forward with this opportunity?