All Forum Posts by: Aaron Zimmerman

Definitely adopt the policy. @Ashish Acharya has provided a nice summary for you. 

This policy also makes your bookkeeping easier because instead of keeping track of depreciation, it's just an expense. Further, it reduces the amount of depreciation recaptured upon sale. 

What you could do to potentially help out is to get passive gains to offset this income. In practice, what this means is either having a business that is profitable or for real estate, these could be cash cows with not a lot of depreciation benefits (think house that cost $50k-$75k and rent out for far greater than the 1% rule). I'm not sure if this aligns with your overall tax strategy, but this could be a good way to do so.

Otherwise, you could start putting properties in an LLC (multi-member, so you and your wife or other partners) and so long as you are active, you could deduct the losses up to basis. However, if you're passive, the same issue will be present (not deducting losses in the current year).

Certainly a lot to think about with 9 months in the year and see what links up with your overall tax/wealth strategy. 

How much income/loss do you have per tax for your two rental properties? Also, S-Corp is not recommended typically for owning properties. 

I second @Ashish Acharya's recommendation. Cheap is expensive. 

I was unfortunately not. My apologies for the delay in response.

It creates more of an administrative hassle to be honest. Then, you have to report capital gains. I'd do as Peter M suggested. 

Buy for cash flow, not appreciation and make sure you have adequate cash reserves. 

There's quite a few CPAs on here that would be good to reach out to. I would recommend extending your return for 2020 so there's not a mad rush on the new CPA. 

It should definitely cash flow upon move out but typically doesn't when you live there. There are quite a few things that can come up with these old Chicago properties. Be sure to have reserves for this as it may eat into savings you expect/project from rents. I have a house hack in Irving park currently. Happy to share my experience and help out in any way that I can!

If it's commercial property, it's typically a 39 year useful life. What you could do is do a cost-seg study where they break the components of their buildings into various useful lives. However, that depreciation is ultimately recaptured later. I'd recommend talking to your CPA and a cost-seg expert.