All Forum Posts by: Joshua Thompson

 I'm happy to jump on a call and point you in the right direction. I'm in Texas as well (Dallas area) but we don't work with clients that have rentals in NY so we wouldn't be the best fit to work together but more than happy to chat for a few minutes. You can also use the "Build Your Team" function above biggerpockets has to find a tax professional and financial advisors that specialize in working with real estate investors.

Hi Michell!  

Without knowing the specifics of your situation, typically real estate can offset 1099R income but I wouldn't use this as a blanket statement. I'm not sure if you're working with a financial advisor but if you're retired, receiving 1099R income, maybe social security, plus income from other sources you definitely want to speak with an advisor. Depending on your investment strategy, goals, current life situation etc., your entire financial and tax situation could change and possibly not for the better. 

I highly recommend speaking with a financial advisor or your current advisors then bring a tax professional into the conversation. Someone recently made a wonderful post about Medicare Premiums and how they can change if you invest in real estate at an older age.

Depending on your income and tax situation you’ll most likely want to stagger the selling of rentals in hopes selling them all now doesn’t shoot you up into higher tax brackets. Keep in mind our tax system is progressive.

Planning is key here to determine your estimated income and how much gain or recapture each property may produce. If you’re working with a tax professional ask them to do a tax projection for you with one scenario assuming you sell all 5 today and the other assuming you only sold 2 today.

With the tax projection you’ll now have a good estimate of what your tax situation will look like and can make decision based on that.

Maybe you can consider selling your portfolio and doing an installment sale, this won’t help on the depreciation recapture but it would help spread the gain over multiple years.

Each strategy has pros and cons, if you want to rip the bandaid off an be done cold turkey (or warm turkey if you’re into that) there most likely will be a large tax hit but less headache holding them longer. Which do you prefer, less stress or less taxes?

Hi Angela! I think it's smart for your client to at least do a quick call with an attorney. We don't know what we don't know at times and most of them will give you 5 minutes to determine if it's a good fit. I believe you can use the Build  Your Team feature here on the website but I do have an attorney in mind, he has offices in TX, Mexico, and CA but believes he co-counsels outside of those states if needed. We don't receive a commission for this referral.

If your client operates in those areas let me know and I'm happy to refer him to you through a message. Full disclosure he is not cheap but he is GREAT at what he does.

Hey Sal! Welcome to the world of real estate investing! I highly recommend you use BiggerPockets Build your team function, it will help find real estate investor friendly services. This would be the best place to start, I would also recommend reaching out to a few individuals you see active on the forum. With you getting started I would also recommend buying 30minutes to an hour of an attorney and tax professional time. 

This should set you up for success and prevent any long term or expensive commitments before you get your first property.

 Sean is correct here and put it perfectly!

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!