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!

Great Quiz! Thanks Amanda! 10/12 :)

This was a great quiz.  I enjoyed it, and it did not take that much time.  10/12

83%, I'll take it ha.. 

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!

Nice quiz, thank you Amanda. 11/12 but still learned a thing or two and got a nice refresher on some of the basics. Keep 'em coming!

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.  

Good Quiz!  I got 10/12 and I should have gotten them all, but I misread two questions.

Thanks for the tune up

Where I pay taxes, the list of answers to the first question are all incorrect ;-)

None the less, I managed 11 of 12 ... my knowledge of U.S.A. IRA accounts is weak (but also not applicable)

Nice tax-time fun for real estate investors!

I got 6/12, in my defense I just subscribed to BP a couple weeks ago and still learning!  Good informational quiz though!

7/12 right. Got all the retirement account questions wrong, so embarrassing! I now have a new goal for 2017: Learn how to invest with my retirement account!

Fun quiz.. 12/12 mostly due to financial background with retirement accounts!

I hate taxes, that's why I have a CPA and an accountant – Buuuuut, I got 100%, 

I’m still not doing my taxes, I’d rather plunge a toilet – lol!

Ya I got the dang retirement account questions wrong.  83% for me.   

A 1031 exchange can't be used for a fix n' flip? Is that true? What restricts the tax code from applying to fix n' flips?

@Everett Grossman , In order to qualify for 1031 treatment the property you are selling must be property that has been purchased with ...."the intent to hold for productive us in business, for investment, or trade".   Property purchased with the primary intent is deemed to be "inventory" and as "inventory" is subject to the same taxation rules as any other type of inventory.  

So it comes down to your intent and how you can demonstrate it.  Property purchased with the intent to hold is investment real estate qualifying for 1031 exchanges.  Property purchased primarily to resell is inventory and subject to ordinary income tax.

11/12 but I still need some tax help!

I was expecting the question, If you buy Amanda's book, is it tax deductible !

THANK YOU SO MUCH! 

I learned so much and nearly decided to "bypass" this quiz once I saw it was on taxes. 

For the most ironic reason: I don't know anything about taxes! 

Haha. 

I learned alot that can help me on my tax return, even though I am a newbie and haven't purchased a property or set up an LLC.

Great quiz 91% on one try!

11/12 as a result of BP and a few books. I know more than I think I do!

Cost segregate, and speed up the depreciation, then exit and 1031.

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