Deducting RE courses/coaching/membership fees
Has anyone had success deducting fees from a REI membership that includes coaching/courses/workshops/etc without an entity in place? I have rental property that isn't yet in an entity and no other business as of yet, just w-2 and 1099. I have heard various opinions from no you can't do that, to yes you can deduct it as consulting because you did that to increase your knowledge and investing not for fun, to you can count it as start up costs if you start a business entity within a year of the date. Entity plans are still in process unsure of which direction I'm going in and the fees were paid lump sum in Nov 2021. Thank you in advance for your thoughts.
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Michael Plaks
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Michael Plaks
#1 Tax, SDIRAs & Cost Segregation Contributor
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What do you mean by "success"? People put all kinds of things on their tax returns, often completely against the rules, and it usually flies under the IRS radar. The audit rates are extremely low, albeit expected to sharply rise soon. Is this a success if you claimed it, and the IRS never challenged you? If yes, then a lot of people can boast these "successes." I expect that some of them will do so, on this very thread. I even know who. :)
As far as the rules, it's NOT about an entity. It is about having an operational business. For landlords, it means having at least one rental property, and it should be ready and available for rent. In other words, to claim yourself as a restaurant operator, you need to have an actual restaurant and be ready to serve customers. Merely watching Iron Chef on TV is not enough.
The key questions are when did your property become ready and available for leasing, when did you purchase the membership and what exactly was included. Depending on the answers, various options exist. Some options are more conservative, and other options (if available) can be aggressive. It's case by case, like most of the complex tax issues.
As far as the rules, it's NOT about an entity. It is about having an operational business. For landlords, it means having at least one rental property, and it should be ready and available for rent. In other words, to claim yourself as a restaurant operator, you need to have an actual restaurant and be ready to serve customers. Merely watching Iron Chef on TV is not enough.
The key questions are when did your property become ready and available for leasing, when did you purchase the membership and what exactly was included. Depending on the answers, various options exist. Some options are more conservative, and other options (if available) can be aggressive. It's case by case, like most of the complex tax issues.