All Forum Posts by: Logan Allec

@Account Closed, have you considered perhaps landing a house hack within a couple years of graduation before jumping straight into OOS investing as your first goal?

@Andre Harris, yes you can obtain an FHA loan on a 3- or 4-unit, but watch out for the self-sufficiency rule.

@Lauren Keen Aumond I am not sure one way or the other if you can take the deduction since I don't have all the facts, but I can tell you that the real estate professional designation is not a requirement to take the home office deduction with respect to a rental activity.

There is nothing in §280A (the home office section in the tax code) that mentions being a real estate professional is required in order to take the home office deduction for your rental activity.

However, in addition to the rules regarding the space itself, there is the requirement that the taxpayer's rental activities rise to the level of a trade or business, which the Treasury has conveniently never defined for us.

But it seems that rental activities would rise to the level of a trade or business if the activities are substantial, regular, and continuous.

However, there is a case, Curphey v. Commissioner, where the Tax Court held that a dermatologist (who would likely not have qualified as a real estate professional by our current definition of real estate professional) was in fact engaged in a trade or business of managing his six rental units.  Note that this case was enacted before the passive activity rules were enacted in the 1986 tax reform bill and likewise before the 1993 creation of the real estate professional designation.

But at the end of the day, if you're looking for primary authority in the code or regs saying, "You don't need to be a real estate professional to claim the home office deduction for rental activities," you're not going to find it.

Your best bet would be to challenge the CPA as to why he believes the real estate professional designation is necessary.  Ask him for the citation to support his position, and if he can't find it, then ask him why he believes what he believes.  If he's coming up with a rule that's not in the tax code, I would say the burden's on him to prove himself right!

@Santiago Lozano, perhaps reach out to Natalie Kolodij.  She is a real estate tax specialist in Washington.  Here is her profile: https://www.biggerpockets.com/users/Natalierose#0

@Joseph Woodman Lots of factors here, but why not get your feet wet first just to see if landlording suits you?  Of course there's another school of thought that would say to skip the kid stuff and jump right into the deep end...depends on temperament, how much time you have, etc.

@Vivian Huang just don't rush into anything OOS...there are true vultures out there...good luck.

Having dabbled in online advertising myself, I don't mind seeing BP getting creative with their monetization strategy through these new forum ads.  Maybe this is best reserved for an offline discussion, but how much do these ads cost?

@Aaron Friberg This depends on your individual tax situation.  For example, if your wife's W-2 earnings exceed the Social Security wage base, the self-employment tax on Schedule C income would be limited to the (smaller) Medicare piece.  But if she doesn't have W-2 or other income subject to Social Security, then the self-employment tax would be a bigger downside.