All Forum Posts by: Kelly O'Keefe

1. Hi @John Morgan
   
   to qualify as real estate professional here are the tests:
1. Perform more than 50% of services in real property trades or businesses (“50% test”)
2. Perform more than 750 hours of service in real property trades or businesses (“750 hours test”)
3. Materially participate in each rental activity (“material participation test”)
   
   what I believe @Jonathan Bock is alluding to is the IRS is pretty strict on these tests and your wife will be expected to substantiate her material participation. If she is already meeting these tests it may be a great tax strategy.
   
   Since you mentioned the 150K I am assuming you are referring to the phase out of material participation. Real estate professionals do not have the 150k phase out, and as a result you may qualify to take losses up to the amount you have at risk.  

I think you should look at working with a tax professional early. If you find yourself second guessing your own preparation or dealing with more difficult topics such as a cost segregation, then it is probably a great time to at least consult with a professional. It isn't uncommon for us to see a new client who could have been reducing their taxes in the past and lost thousands as a result. If you can meet with a real estate specific tax professional and discuss your tax strategy at the beginning of the year I think this would be worth the fee. 

 

Hi @Mario Keophilalay, 

I see that you are in Colorado Springs, Fort Carson has a lot of soldiers coming and going. There may be a few stores where they are selling items quickly prior to moving. I know there are a few on post that are designed to help soldiers, but there are probably some in the area outside of base as well. It might be worth it to find quality furniture and then rent a trailer to take it to Dallas. Alternatively there may be bases closer to Dallas to find similar deals

Good luck!

@Jamie Banks Thanks for the Post and congrats on the anniversary. Sharing stories like this is what makes me love this site  

Hi @Tam Le

I agree with Janet that it is a little bit late and that makes it more difficult, but it is far from impossible. As long as you have kept accurate records and can find someone to assist you in a tax strategy. I believe it is more than possible to have a positive experience this year, and that will also set you up to save even more in the future. Also you are able to amend prior years which could help if anything was missed. 

On this forum there are 20+ talented tax professionals who would be happy to help. Depending on the situation there is a potential to save money and possibly get some back as well. If you have any specific questions or concerns you can always post those and see who has the most expertise in that area. Alternatively you can scroll through past discussions in the tax page, or go to the "Build Your Team" tab and see professionals who have partnered with BiggerPockets. 

At the end of the day you are in the right place and still have a couple months to set a strategy before the filing deadline. Best of luck in your search!

Thanks @Julio Gonzalez, Another great post.

@Justin Ward Hopefully it helps!

In my experience that insurance is well worth the minimal cost. One incident of theft or vandalism could cost you thousands. Having insurance could also protect you from tenants who choose to cause damage while they are leaving, or even come back after they are out of the property to cause trouble 

@Justin Ward 

To be considered by IRS as a short-term rental and get the tax benefits you must meet the following requirements (defined by Treasury Regulation Sec. 1.469-1T(e)(3)(ii)(A))

• The average period of customer use is 7 days or less
• The average period of customer use is 30 days or less. (Confusing we know, this means that not only does the customer stay for 7 days or less on avg. they also don't come back multiple times during the year for separate trips and these stays add up to > 30 days -> Trip one: 7 days, Trip two: 7 days, etc.)
• Personal use of the property cannot be 15 days or more OR more than 10% of the total rental day

In order to offset income and be considered a Real Estate Professional you must have Material Participation, which has a few tests. 

     Spend more than 500 hours on the short-term rental business.

• Do substantially everything for the short-term rental business.
• Spend more than 100 hours on the activity, with no other individual surpassing your time commitment.
• Engage in a significant participation activity for more than 100 hours, with your combined activity in all significant participation activities exceeding 500 hours.
• Participate in the business for five of the previous 10 taxable years.
• Engage in a personal service activity (non income-producing) for three of the previous taxable years.
• Demonstrate regular, continuous, and provable participation in the business for more than 100 hours.

If these benchmarks are met then your income would no longer be considered passive but active and any losses could then be used to offset other active income 

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

Hey @Jen Maffei

I saw that title and just had to click. I spent some time in Portland myself and love your approach, Especially when it comes to building relationships. Welcome to the site!