All Forum Posts by: Michael Plaks

$6k for 30 properties across multiple states is not entirely unreasonable. But if the only thing your accountant is doing is "copying" your data - then either they do not provide true value or maybe you do not appreciate what they are providing.
https://www.biggerpockets.com/forums/51/topics/1088325-expla...

You will have to treat it as two properties. Your former unit is most likely eligible for the exclusion. The other unit is not eligible.

@Nick Johnson

It may still be worth it to retain that firm is they did a good job. Tax service fees are rising across the board, and quality work is more difficult to find every year.

Also, please read this:
https://www.biggerpockets.com/forums/51/topics/1222774-expla...

Before you rush to a conclusion, we need to know more. What my colleague @Jason Malabute said is correct, but it assumed that taxes were filed correctly in 2021, 2022 and 2023. Correct filing would be to have NO deductions for renovation in 2021-2023. Then all of them count in 2024.

However, what have possibly happened is that your accountant deducted your renovation costs in 2021, 2022 and 2023 as they were incurred. If this is what they did, then counting them all for 2024 would be double-dipping since you already took advantage of these deductions in 2021-23. You would have to either record a capital gain in 2024 or redo 2021-23 to remove those improper deductions - which is costlier and more complicated.

Combined W2 income of $300,000 should generate more than $40,000 in taxes, especially with state taxes added. You're looking at some wrong number to measure your tax burden.

Losses do not offset taxes, they offset taxable income. So if you really have a $60,000 loss, you would be paying taxes on $240,000 of income instead of $300,000. That may lower your tax bill by maybe 20,000.

If you don't trust your tax consultant and need to double-check their opinion, maybe you need a different tax consultant. 

That said, your consultant is correct. You get to claim whatever is the larger amount - a "standard deduction" of $29,200 for a couple - or a sum of all allowed "itemized deductions."  Medical bills are one of those itemized deductions, and you will not be able to beat $29,200 without a mortgage. You get a BETTER deal this way.

The reason you have to pay the IRS is almost certainly because you don't take enough taxes out of your paychecks. But this is for your tax consultant to explain.

I will make a risky guess. Are you approaching this retiree suggesting they fund your project and trying to reassure them they won't have a tax burden? If so, I recommend not doing it, for ethical and liability reasons. The correct approach is to tell this person to consult their own tax advisor.

That said - you're describing a lender charging interest on a loan. The interest will be taxed at their ordinary rate, not capital gains rate. However they may have a very small impact or even no impact on their taxes, depending on their overall tax situation. 

Also, need to be aware of the local usury limitations on interest.

@Natalie Kolodij already confirmed that this is a correct result. Here is a long and technical post if you're interested to understand how these investments work for taxes:
https://www.biggerpockets.com/forums/51-tax-legal-issues-con...

Interesting. I believe that this is a recently added option, I don't think it existed in the past. I would certainly keep the existing EIN. But - as you pointed out - my information may be incomplete or outdated.

Your wife owns a consulting business. What does she consult people on? Do they really need her consulting? Or can they continue to proceed without her help?

Because accountants are very similar to consultants. We provide some value, but people can also do without us. How much value? That depends of course, and here is a long post discussing this concept:
https://www.biggerpockets.com/forums/51/topics/1088325-expla...