All Forum Posts by: Sean Graham

 The 3115 isn’t a problem with the right information readily available 

Yes, Agreed. It is fairly basic compared to other changes in accounting method. However, not every tax prepaer is familiar and willing to do the form. While the ones who are I hear a minimum of $2,500 for filing the form. The 2,500 would obviously not compare to tax deductions generated in the thousands. I am still waiting on my EFIN myself, but I am not to sure how much I would charge for this form, even though I'm familiar with the calculations. Have you seen anybody charge less? 

Hi everyone,

I purchased my first rental property in June 2023, and it took until December to prepare it for tenants. I posted the listing on December 12, and my first tenant moved in on December 26th.

As I’m filing my (extended) 2023 taxes, I’d appreciate any advice on what expenses I can deduct and what I should capitalize, especially since the property was mostly vacant. For context, (1) the property was in poor condition when I acquired it, and (2) I’m a passive real estate investor.

Here are my expenses:

• - Travel (~$2,000) and meals during travel ($500)—I understand only 50% of meal costs are deductible.
• - Gardening maintenance (just to prevent the grass from getting too high, not an improvement).
• - In-year tax consultation ($300).
• - Commission to my buyer’s agent ($300).
• - Insurance premium ($1,000).
• - Insurance deductible following a claim ($1,000).

I believe the property won’t begin to depreciate until it’s in service, which seems to align with how TurboTax is set up. If that’s not the case, any clarification would be appreciated!

Lastly, if anyone has recommendations for affordable CPAs in Cleveland or Ohio who could assist me, I would be grateful.

Thank you so much!

Hey, 

As already acknowledged, it is possible but a hefty project to undertake. While you will need an engineering company to complete the Studies, you will need a tax preparer to file Form 3115 to do the catch up, as suggested above. You are playing a fine line this close to the extended date though. You are subject to failure to file and failure to pay penalties. Failure to file is based on the original filing date. Although, they are based on taxes owed and can be reduced along with the strategy if your liability is sufficiently reduced. It may be a mute point depending on the tax benefits that you uncover. The DIY software may be a good option, but as stated has its limitation, especially if you have a unique unaverage property. I am a CPA operating a firm myself. I'm very intrigued with the idea of using the software myself. I wish you luck with this endeavor! I hope you and your professionals knock this one out of the park! 

Austin L. Smith, CPA 

I have three STR properties that my wife and I have self-managed but from a tax perspective we've only taken the normal depreciation the last few tax years. However I am wondering if I can do cost segregation for all these properties for 2023 taxes since I owe quite a bit of taxes due to high W2 income. I also do not expect high W2 income for 2024 and beyond, so 2023 might be the best year to do this for the best tax savings. I did look at some of the material participation criteria and we should easily surpass the requirements since we pretty much spent time improving the home ourselves, managed all guest communication, etc.

Thoughts?

Thank you Melanie for the advise. IF the bonus depreciation is 60% for this year and I do cost segregation, what happens to the remaining 40% of the depreciation. I assume you deduct it over the next 5, 7.5 and 15 years? Is there anyway to use the remaining 40% on the following year? 

Hello. My wife and I are physicians that like in CT and work in NY. We plan on purchasing our first out of state LTR. I am enrolled in Public Service Loan Forgiveness (PSLF) program and need to pay 10% of my taxable income towards my student loans. My wife and I file separate because if we filed jointly we would have to pay 10% of our combined taxable income. That said, should we put our real estate investment in my name or hers? I am assuming if the property generates income it would be better in her name. Any help would be greatly appreciated. Thanks.

Hello, yes, there are all long term rentals. I keep reading and I learned that prior year passive losses "can not" be unlocked to offset current year W-2 income via REPS if me or my wife became REPS in 2024. I can use past losses to offset current year capital gains but I can not use them to offset income in 2024. I can only offset w-2 income with losses of the current year in which my wife became Real state.