All Forum Posts by: Angelo Cortez

As title says - I'm closing on an STR in December, but I likely won't get the STR permit for it (Sacramento) until January. Is there a way I can still get the tax deductions for 2023? What if I furnished it in 2023 and had my parents stay in it for a small fee? Getting some anxiety here as the year is ending.

No you cannot. Only visitors that pay full market price count as STR stays, and you need more than one stay in December. And if you put someone there without permit, then you are breaking local law for the sake of accelerating your tax deduction.

Also, you will need to do everything yourself during December, including cleaning. Otherwise, even with some guests, you will likely fail another requirement for an STR: material participation.

I'm aware I need to do everything for December. I'll likely use the friend route. Am I still able to rent it out to him for less than a few days because of the Augusta rule (don't have to report to IRS if it's less than 14 days)? Just not sure if I'm able to get it counted as an STR for this year if I don't have the permit this year.

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Sacramento, California

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Sacramento, California

Have you considered Smartsheet? A bit biased as I'm a Solutions Architect there.

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Sacramento, California

Quote from @Michael Plaks:

Quote from @Bonnie Low:

Quote from @Michael Plaks:

@Angelo Cortez

It has been done before many times.

Tax professionals' opinions on whether or not it is a legitimate strategy will vary, because it is grey area. In other words, I'm not aware of a definitive prohibition against it, but am aware of various theories on why it could be considered abusive y the IRS.

I'm curious about your theories on this. Would you mind elaborating? I haven't given this much thought, but with more people struggling with their STRs in certain markets and trying to pivot to MTR I could see this being a valuable topic

If you were motivated/forced to convert due to market changes - I see no issue. If, however, you planned upfront to use it as an STR for a brief period just to milk depreciation - it becomes debatable.

This is what I thought. My CPA is telling me that I should only buy a STR for the sake of if I plan on it being STR. Right now I am on a fork on the road and debating whether I should buy in a vacation rental market vs travel nursing market.

What is a valid condition of being forced to convert? PITI + expenses > STR Revenue?

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Quote from @Sean O'Keefe:

@Angelo Cortez the IRS does recognize MTR as a classification - only STR and LTR.

"Never" is a strong word. I think the better question -> "Should you do it?"

Yes I understand an MTR is classified as a LTR. I’m just trying to add context that it’s easier to switch it to an MTR due to it being furnished already.

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I am considering a strategy where I buy a STR in 2023 (do cost seg + bonus depreciation on it), then convert it into an MTR/LTR next year. My CPA said that this has never been done before, nor does he recommend doing it. Curious if anyone has actually tried it.

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Great work! Our duplex is ~2 miles from UCD Med Center (South Oak Park).

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Sacramento, California

Do you have any recommendations to how to get my foot in the door for that industry?

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Thanks for the response Jeff. Never heard of that before. Is it possible to write off W2 taxes with that route?

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Quote from @John Malone:

@Angelo Cortez number 1 won’t work. You won’t claim REPS with W2. Dozens of tax court cases on this.

STRs could work if you have the time to participate properly and manage

Thanks. Really looks like STR is my only option. Now I gotta figure out where to get one lol

1 Vote

All Forum Posts by: Angelo Cortez

Angelo Cortez has started 9 posts and replied 38 times.

Post: Closing STR in December, but won't get STR permit until January. (STR W2 Taxes)

Post: Closing STR in December, but won't get STR permit until January. (STR W2 Taxes)

Post: Project Management Software / Apps

Post: 2023 STR Cost Seg -> 2024 MTR/LTR conversion implications?

Post: 2023 STR Cost Seg -> 2024 MTR/LTR conversion implications?

Post: 2023 STR Cost Seg -> 2024 MTR/LTR conversion implications?

Post: UCD Med Center Renovation - Sacramento, California

Post: Maximizing W2 Tax Deductions - Quit second job or keep working 2 jobs or STR?

Post: Maximizing W2 Tax Deductions - Quit second job or keep working 2 jobs or STR?

Post: Maximizing W2 Tax Deductions - Quit second job or keep working 2 jobs or STR?