Millionare RE Trade show Long Beach,CA -Tax questions
This week I went to the Apartment Owners Association trade show and networking event. Lot of older rich landlords and tons of vendors for everything your land-lording heart could desire. There were engineering company's, eviction services, Coin-op washer/dryer purchases and leases etc, the full gamut.
One of the vendors, a licensed tax preparer, captivated us all with her seminar entitled "you can write off almost anything". Needless to say the hosting room was nearly full with every type of REI participant. Much of what she said is common knowledge for in us REI and we already know; however, something she said gave me a little twitch.
She said, you, as an RE investor, need a business other than your property as your business. Insomuch as, the business of land-lording cannot be your only business.
I thought this to be a critical nugget that many RE investors might miss. She went on to say that whatever the business, it needs to be linked to income, which can be tied back to your RE endeavors. So, property management, construction, etc, and related expenses can be written off on your taxes; another nugget.
In order for the IRS to recognize you as being in business your need to have the ability to link money to a source\an activity and once that is accomplished you can begin to write off expenses that are ordinary and required for your business.
Now, I'm sure i am butchering the quote, but I think the just of it has been conveyed.
Now, my question is, if my first business is land-lording and my 2nd business is, lets say flipping, or wholesaling, do I need to have separate everything; i.e. bank accounts, corps etc, following her logic, to apply her interpretation of the tax code correctly? Of course the best person and most qualified to answer the question would be the person who said it but, it was no way I was fighting the mob of ppl rushing to talk to her.