All Forum Posts by: Account Closed

Looking to connect with someone outside ReafCo. Could not come to terms with certain sections of buyer agreement. Thanks.

 Jim - Tried reaching out to you. Thanks.

Looking forward to it!

To identify a proficient real estate CPA, investors should prioritize professionals with a proven track record in handling real estate portfolios, transactions, and tax planning. 

Look for CPAs who stay abreast of evolving tax codes related to real estate and possess a comprehensive understanding of deductions, credits, and depreciation strategies unique to the industry. 

Additionally, seek out testimonials or referrals from other real estate clients to gauge the CPA's expertise and reliability.

I am interested in beginning my real estate investment journey in the state of Ohio.

It seems as if the market is primed for growth after speaking with others.

Are there any real estate agents here who work in Ohio? Pls connect with me if so.

Thanks.

Kislay Shah

Evan -

The distinction between "business" and personal use, especially in the context of home office deductions, can be complex and is subject to tax regulations. Generally, the use of a portion of your home as a home office for a W-2 job is not eligible for the home office deduction, as the space is not being used for the taxpayer's trade or business.

However, for rental property management, it might be considered a business use, and expenses related to that business use could potentially be deductible. It's important to note that specific rules and limitations apply, and you may need to meet certain criteria to qualify for deductions.

The IRS often requires that the space be used regularly and exclusively for business, meaning it's not used for personal activities.

Evan -

Thanks for writing and happy to shed some light.

Here are some points you should consider:

To qualify for a home office deduction, the space must be used exclusively for business. If you use the office for both your W-2 job and managing rental properties, it may complicate the exclusivity requirement. However, if you can clearly designate a specific portion exclusively for business use, you may be eligible.

The method of calculation for the home office deduction typically involves determining the percentage of your home that is used for business purposes. This is often done by dividing the square footage of the office space by the total square footage of the home. If you are using the space for both personal and business purposes, you may need to prorate the expenses based on the business use percentage.

Lastly, the cost allocation for the addition could depend on the nature of the expenses and whether they are directly attributable to the office space. If the addition cost is significantly higher per square foot than the original home, you may need to justify this allocation method.

Keep detailed records and receipts to support your deductions. I would highly recommend you reach out to a tax professional that will help ensure that you navigate the complexities of tax law correctly and maximize your eligible deductions.

Thanks.

Ian -

I don't think there's a one stop answer for this as I haven't fully studied your situation.

In addition, the IRS has specific rules regarding loans between family members, and there are tax implications for both the lender and the borrower.

The IRS might impute interest on the loan, meaning they could assume that interest was charged even if it wasn't. This could affect the lender's tax situation.

Furthermore, if the interest rate is below the IRS's Applicable Federal Rate (AFR), the difference could be considered a gift. There are gift tax implications for the lender if the gift exceeds the annual exclusion amount.

Lastly, I would recommend forming a legally binding agreement documenting the terms of the loan, including the deferred interest. This helps clarify the arrangement and provides evidence in case of any tax-related inquiries.

Reach out to a professional CPA who can closely examine all aspects of this deal and can tailor advice accordingly.

Thanks.

Kislay Shah CPA

Tej -

Many thanks for the question and happy to shed some light.

The eligibility of applying bonus depreciation to a foreign Short-Term Rental (STR) is contingent on the tax regulations of the specific country where the property is located.

If your foreign STR is subject to U.S. tax laws, you may explore the possibility of applying bonus depreciation, but it's crucial to ensure that the property meets the criteria outlined in the relevant tax regulations.

If the STR is situated in a foreign country, you'll need to investigate the tax laws of that specific jurisdiction. Some countries may have their own provisions for accelerated depreciation or bonus depreciation, while others may not offer such incentives.

Considering a cost segregation study is a strategic move, as it helps identify specific components of the property that may be eligible for accelerated depreciation. Since I have not studied your situation, I would recommend you to consult with a tax professional or accountant familiar with the tax laws of the country where your foreign STR is located.

Feel free to reach out with any further questions/concerns.

Thanks.

Investors - Ask me anything related to real estate investing tax strategy. I am here to help and lift up the community.