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Tax, SDIRAs & Cost Segregation

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Michael Moreno
  • New to Real Estate
  • San Antonio, TX
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Seeking Tax Advice for Beginner Real Estate Investor

Michael Moreno
  • New to Real Estate
  • San Antonio, TX
Posted Mar 20 2024, 18:56

Hi everyone,

I am a 23-year-old beginner real estate investor, and I recently made my first purchase in September 2023—a one-story single-family primary residence with 3 bedrooms and 2 bathrooms. I currently occupy the principal room, leaving two vacant rooms.

My plan is to rent out one of the vacant rooms to someone I know, but I'm seeking advice on the tax implications of this move. I understand that as one acquires more types of assets, taxes can become more complex, and I want to ensure I'm maximizing my savings.

Are there any CPAs in this community who also own real estate and could offer guidance or share their experiences in navigating taxes as a real estate investor?

Looking forward to hearing from you all!

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Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
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Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
Replied Mar 20 2024, 19:58

There are many CPAs here and many investors who think they are CPAs.

The key issue to understand is: you cannot create any tax losses from renting rooms in your house.

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Jaime Duron
  • Realtor
  • Austin, TX
26
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57
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Jaime Duron
  • Realtor
  • Austin, TX
Replied Mar 20 2024, 21:15

Hi @Michael Moreno! I would definitely talk to a CPA, but I believe you'll already maxing out your home since you're using it as your homestead and writing off the mortgage interest. 

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User Stats

44
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Michael Moreno
  • New to Real Estate
  • San Antonio, TX
20
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44
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Michael Moreno
  • New to Real Estate
  • San Antonio, TX
Replied Mar 20 2024, 21:47
Quote from @Michael Plaks:

There are many CPAs here and many investors who think they are CPAs.

The key issue to understand is: you cannot create any tax losses from renting rooms in your house.

So if I rent out one of my rooms at say $600 a month ($7200 a year), I cannot deduct more than $7200 in expenses?

User Stats

57
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Jaime Duron
  • Realtor
  • Austin, TX
26
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57
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Jaime Duron
  • Realtor
  • Austin, TX
Replied Mar 20 2024, 21:58

Your receiving income, but I'm not sure how much you can write off or if you can. I'm in the same boat, so I'll find out soon when I submit my taxes this year. 

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Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
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Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
Replied Mar 20 2024, 22:26
Quote from @Michael Moreno:
Quote from @Michael Plaks:

There are many CPAs here and many investors who think they are CPAs.

The key issue to understand is: you cannot create any tax losses from renting rooms in your house.

So if I rent out one of my rooms at say $600 a month ($7200 a year), I cannot deduct more than $7200 in expenses?
Bingo!

User Stats

44
Posts
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Michael Moreno
  • New to Real Estate
  • San Antonio, TX
20
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44
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Michael Moreno
  • New to Real Estate
  • San Antonio, TX
Replied Mar 20 2024, 22:31
Quote from @Michael Plaks:
Quote from @Michael Moreno:
Quote from @Michael Plaks:

There are many CPAs here and many investors who think they are CPAs.

The key issue to understand is: you cannot create any tax losses from renting rooms in your house.

So if I rent out one of my rooms at say $600 a month ($7200 a year), I cannot deduct more than $7200 in expenses?
Bingo!


 Wow that’s awesome! Another question I have. Am I able to deduct purchases of furniture that I made last year for this year? 

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Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
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Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
Replied Mar 20 2024, 22:49
Quote from @Michael Moreno:

 Wow that’s awesome! Another question I have. Am I able to deduct purchases of furniture that I made last year for this year? 

You deduct it when you first started using it in your rental business, whichever year it happens to be.

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Zachary Jensen
Tax & Financial Services
#4 Tax, SDIRAs & Cost Segregation Contributor
  • Accountant
  • San Diego, CA
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Zachary Jensen
Tax & Financial Services
#4 Tax, SDIRAs & Cost Segregation Contributor
  • Accountant
  • San Diego, CA
Replied Mar 21 2024, 08:13
Quote from @Michael Moreno:

Hi everyone,

I am a 23-year-old beginner real estate investor, and I recently made my first purchase in September 2023—a one-story single-family primary residence with 3 bedrooms and 2 bathrooms. I currently occupy the principal room, leaving two vacant rooms.

My plan is to rent out one of the vacant rooms to someone I know, but I'm seeking advice on the tax implications of this move. I understand that as one acquires more types of assets, taxes can become more complex, and I want to ensure I'm maximizing my savings.

Are there any CPAs in this community who also own real estate and could offer guidance or share their experiences in navigating taxes as a real estate investor?

Looking forward to hearing from you all!

Hey Michael, 
I would suggest you start learning about the main tax-advantaged strategies in real estate. Real estate professional status, as well as the short term rental loophole are a few big ones. From there you can see how your investing can have the best tax advantages as you progress. Best of luck! 

User Stats

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Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
5,348
Votes |
4,732
Posts
Michael Plaks
Pro Member
#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
Replied Mar 30 2024, 19:14
Quote from @Michael Moreno:

I am a 23-year-old beginner real estate investor, 

Bonus advice: don't try to look like you're a 53-year-old lawyer, wearing white shirts, suits and ties everywhere  ;)