All Forum Posts by: Nicholas Aiola

@Kay M. You can use the HELOC for whatever you'd like. If you are using the HELOC funds to purchase an investment property, your ability to pay back the HELOC will be dependent on the performance of the investment property, or you will have to cover it personally. You will need to factor in the HELOC repayments into your investment analysis.

@Scott Trench Thanks for the shoutout!

@Frank Rubino Scott hit the nail on the head - Sec. 121 is likely the best way to go for the unit you occupied, and an analysis would have to be done on the gain allocated to the rental unit to determine whether or not it is worth the cost of pursuing a 1031 exchange.

@Mike Shemp Very kind of you! Thanks so much :) We're always happy to help and look forward to continuing to do so.

@Terry Holschuh We sure do!

@Travis Andres You are not required to use a CPA that is local to you or the state you are investing in, so it is more important you find a CPA who specializes in real estate and is a good fit for you. As long as you are comfortable working remotely, location is less significant than the value your CPA can provide you with.

@Peter Lampione In most cases, yes. A syndication typically exits and then files a final partnership tax return, providing you with a final K-1. This would be an entire disposition of a passive activity, allowing you to use suspended PALs to offset the gain (including Unrecaptured Section 1250 Gain).

@Ramon Coronado A gift wouldn't be appropriate here. You could deed the properties to the LLC, but there are no tax benefits to this since LLCs are tax neutral. Since it is more of a legal/asset protection decision, you are better off consulting an attorney for the answer to this question.

@Brendan August AGI is irrelevant for the STR loophole. You will each have to materially participate in the activity in order for the activity to be nonpassive for each of you. If you do not materially participate, but your partners do, it will be passive for you and nonpassive for them. The 100-hour test is one of seven material participation tests - you may be able to pass one of the others, although test #1 (500 hours) and test #3 (100 hours) are most preferred.

@Chris Yeung It's possible. CPAs are prohibited from providing assurance on solvency (net worth verification), as per AT Section 9101. CPAs can verify accredited status based on the income verification, but any certification beyond confirmation of the income reported on the return as prepared cannot be done under our due diligence standards as CPAs.

@James Vance You don't want to spend $1 just to save $0.30. If the only reason you had kept or would take out a new mortgage on the property is to deduct the mortgage interest, you did not make the wrong decision in paying it off. However, if you remortgage the property and use the cash to invest/acquire additional properties, it is a tax advantaged way to do so. The influx of cash is tax-free, and the interest is deductible against the new property's rental income (interest tracing rules).