All Forum Posts by: Aaron Zimmerman

There’s 7 tests for materially participation. Id encourage your cpa to look at the 100 hours and more than anyones time test or the substantially all the activity test. It does Require more documentation as you’ll need to document the time of others, but that’s the way to do it 

I actually don’t have a realtor I’d use there currently. The group has a few realtors.

I would look to replace your current CPA. It's clear they don't know enough in this complex area. That being said, you're going to have a hard time finding another CPA that can file your return timely. 

If you materially participate and rent for 7 days or less, and don't use it personally, this will be a non-passive activity and losses can be written against active income. 

For LTR, these are generally passive and can't be written off against active income unless you're a real estate professional. As such, that's why your CPA said what he said. 

I know there is a facebook group for local investors. It's called "South Bend / Michiana Real Estate Investors". If you post in that group, you should be able to find some resources. I have a SFH in south bend. I don't think you'll be able to find multi-family property for $60k-90k with no major rehab. You could definitely find a SFH for that price and depending on the debt product, it could cash flow $200 per month.

Yes it is possible but you will want to talk to a real estate CPA that keeps you on the straight and narrow. There's a lot of opportunities for deductions here but you also want to make sure you're calculating material participation hours correctly, keeping track of everyone that's worked on your property (and the number of hours worked), rent out for 7 days or less, and not use the property for personal use to maximize deductions. 

Thanks for posting! 100% agreed. You also need a real estate focused CPA to help navigate the complexities and tax implications of each!

Yes. Biggest things to be aware of with a house hack (at least that's what I'm inferring from your post):

1. Correct allocation of expenses for personal use (the side you're using for your primary residence) and rental use (the side you're renting out).

2. Making sure you have all your main deductions (insurance, property taxes, mortgage interest)

3. Repairs vs capex - this will be a major item to be aware of for your property.

4. Getting your basis correct (this will impact how much depreciation you'll get)

@Jonathan Klemm thanks for the referral! 

@Lauren Purcell - totally understand wanting to get acquainted with someone in real estate. Happy to answer any questions for you. 

@Jonathan Klemm thanks for the shoutout!

@Rodney C. thanks for posting and sharing your background. Feel free to PM me if I can provide any value! Id love to connect and help provide value to you.