Are You Tax Savvy on Real Estate Strategies?

58 Replies

Hey everyone! It's that time of year again - TAX SEASON! Ahhhhh!

So, we had our knowledgeable BiggerPockets member, Amanda Han, create a tax strategy quiz to see where your understanding of real estate strategies stands.

Let's see how well you can do - QUIZ

Also, don't forget to purchase Amanda's book, The Book on Tax StrategiesHERE!

Good luck!

I got the retirement account questions wrong, but in my defense I have no plans to buy a rental property from or for my parents. 

One interesting question is the one about expensing a trip for business. I would argue that not only does the trip need to be for business, but only for business. In other words if you go on a five day trip to Hawaii and spend two days looking at properties, it could be hard to defend that as a business trip. I am not saying you cannot have fun on a business trip, but be careful if you are trying to shelter vacations under a business trip title. That is hard one to defend in an audit. 

Originally posted by @Joe Splitrock :

I got the retirement account questions wrong, but in my defense I have no plans to buy a rental property from or for my parents. 

One interesting question is the one about expensing a trip for business. I would argue that not only does the trip need to be for business, but only for business. In other words if you go on a five day trip to Hawaii and spend two days looking at properties, it could be hard to defend that as a business trip. I am not saying you cannot have fun on a business trip, but be careful if you are trying to shelter vacations under a business trip title. That is hard one to defend in an audit. 

 Ha! I only got two wrong as well and they were retirement account questions - the type you can borrow from (I've never borrowed from mine) and what you can do with the money. 

I think expenses are much easier to justify when there is documented income to the business. If you bring in $100k annually in rent, it is much easier to justify most expenses than if you have one house and are trying to write off your trip to Hawaii :) . The other part of it is operating your business like a business. If you show up to collect cash in envelopes and a business card is something you scribbled on the back of a Hardees bag, you're going to have a much tougher go of things in an audit situation. 

Hey Joe.  You should read Amanda's tax strategy book.  She has a section in it about how it's possible to make a trip like you mentioned tax deductible.  Definitely worth the money and time it takes to read it!

11/12 not to shabby considering I have an accounting background.  I missed the first retirement account question thinking it was about 401ks not IRAs.  Should have read it more carefully.  I probably should study up on Self-Directed 401ks a bit more anyway.  

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