All Forum Posts by: Ashish Acharya

@Julian Sanchez You're right—DTI limits can quickly cap growth for SFH investors. To get around it, many pivot to DSCR loans, where approval is based on the property's income, not personal DTI. Others move to commercial portfolio loans that underwrite the overall deal rather than personal finances. Some investors use LLC structures with non-recourse loans to separate personal liability, while others scale through partnering or using seller financing and creative financing, which don't impact DTI at all. Most experienced investors shift to these strategies after a few residential loans.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@DaNeale Canidy Welcome to the community—and you’re already ahead of the curve by asking the right strategic questions early on.

You're right: with tariffs, rising material costs, and labor shortages, the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) can be tougher in the short term. Rehab costs are less predictable, contractor timelines are stretched, and appraisal values might not rise fast enough to support a strong refinance. That said, BRRRR isn't dead, but it does require stronger deal analysis, more conservative numbers, and better buffers than before.

If you’re just starting out and not interested in house hacking, you might consider turnkey small multifamily deals or value-add properties that need light cosmetic work instead of full rehabs. This approach lowers risk while still giving you cash flow and the option to refinance later if rates or appraisals improve.

BRRRR is still viable, but be more selective and don’t rely on appreciation or ideal refi terms to make a deal work.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Matthew Waggoner Given your situation, with your wife qualifying for Real Estate Professional Status (REPS) in 2024 and your combined property basis around $569K plus improvements, a cost segregation study could be highly valuable. With REPS, you can use rental losses to offset both W-2 and 1099 income, and even with 60% bonus depreciation in 2024, you could likely generate $100K–$150K or more in immediate paper losses. Although a study typically costs $4K–$6K per property, the potential tax savings would far outweigh the upfront expense, especially given your current tax liability. Plus, your recent capital improvements (roof, windows, flooring) may further accelerate depreciation. If done before filing 2024 taxes, you can capture all these benefits without needing amendments.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Rodrigo Hernandez Yes, there are a few important considerations. Since the property is titled in your personal name but you're planning to collect rent through an LLC bank account, the IRS still treats the rental income and expenses as yours personally—because ownership, not bank account activity, determines tax liability.

So, even if the LLC collects the rent and pays the mortgage, the income and deductions still flow to your personal return (Schedule E), not the LLC's, unless you formally transfer ownership to the LLC—which has legal and tax implications (like potential transfer taxes, mortgage due-on-sale clauses, etc.).
To avoid confusion or misreporting:

• Keep clear documentation showing the LLC is acting as a property manager or agent on your behalf.
• Ensure the LLC doesn't claim the income on its own tax return if it doesn't legally own the property.
• Alternatively, consider forming a single-member LLC for liability and banking separation, which is disregarded for tax purposes, keeping reporting simple.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Jonathan Thomas If the California house was your primary residence for at least 2 of the past 5 years, you likely qualify for the Section 121 capital gains exclusion—up to $500K for married couples—so a 1031 exchange may not be necessary. You’d only owe capital gains tax on any amount above that, plus depreciation recapture if applicable. A 1031 exchange only applies to investment properties, and requires you to reinvest all proceeds into a like-kind investment property of equal or greater value—so you can’t use it to buy a personal residence in Georgia. If you sell both properties, only the Nebraska home might qualify for a 1031 (and only if it was used as a rental). If your plan is to buy a home near your daughter and live in it, the 1031 wouldn’t apply, but the Section 121 exclusion on the CA home may fully or mostly shield you from taxes.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Sharon Carson You're exactly right—not replacing the $154K debt in your 1031 exchange would be considered "mortgage boot", and that portion of the proceeds would be taxable. The IRS requires you to replace both the property value and the debt to fully defer capital gains. So yes, unless you replace the $154K loan with either new financing or additional cash, you’d owe taxes on that portion.

Given that you’re retired with limited income, qualifying for conventional financing could be difficult, and hard money rates may be expensive and short-term—making it a less attractive option. In that case, it might actually make more sense to accept the boot, pay tax only on the $154K portion (not the full gain), and still 1031 the rest to defer the majority of your tax bill.

So, yes—you could still do the 1031 exchange, but just accept a partial boot and pay tax only on that amount, rather than trying to force financing that doesn’t make sense.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Andreas W. Great question—and you're not alone in getting mixed answers. Here’s the tax treatment clarified: floating vinyl plank flooring is generally considered a capital improvement and thus part of the building structure, which means it should be depreciated over 27.5 years for residential rental property.
However, if the vinyl planks are easily removable and not permanently affixed, they might be classified similarly to carpet or flooring replacements, which can fall under 5- or 15-year property and potentially qualify for Section 179 or bonus depreciation—but this is rare for vinyl planks.
In most cases, especially if the flooring is glued or clicked in and not designed to be temporary, the IRS sees it as a capital improvement, not personal property—so 27.5-year depreciation is standard.
If you're doing a larger rehab, a cost segregation study may help reclassify some components for faster depreciation.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

They’re making a comeback—and for growth-focused businesses, they might be the smartest move you can make. Here's why:

Why C-Corps Deserve a Second Look

• Flat 21% tax rate
• No self-employment tax
• Built-in exit strategy with ESOPs
• Attractive fringe benefits

Tax Advantages That Matter

• Deduct health, disability & retirement benefits
• Greater loss flexibility for offsetting future income
• Avoid self-employment tax

Who Should Consider a C-Corp?

• Business owners reinvesting earnings
• Founders building for a future exit
• Companies retaining top-tier talent
• Businesses with <5 shareholders

Don’t let the “double taxation” myth stop you.

The right structure can unlock major savings AND growth potential.

Let’s run the numbers—C-Corp might be your best move in 2025.

@Morgan Painter Since this STR isn't breaking even, selling now could be your cleanest exit—especially if your goal is to pay off the HELOC and credit cards. Selling would trigger capital gains tax and depreciation recapture, since this is an investment property, not a primary residence (so the 2-year rule doesn't apply). A 1031 exchange would defer those taxes, but you'd have to reinvest all proceeds into another property, meaning you couldn't use the equity to pay off debt. If liquidity is the priority, selling and paying taxes may be best.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

@Marcos De la Cruz Clint Coons' strategy using out-of-state LLCs held by a Wyoming Statutory Trust (WST) is often marketed to help avoid California's $800/year franchise tax, but in practice, California's Franchise Tax Board (FTB) is very aggressive in enforcing this fee. As a California resident, if you're actively managing or benefiting from an out-of-state LLC—even if it holds out-of-state property—the FTB may still consider that LLC as "doing business in California" and require the annual tax.
While a WST may offer asset protection and privacy benefits, it generally does not exempt you from California’s filing and franchise tax obligations if you're a CA resident. The FTB has challenged similar structures and may assess back taxes and penalties if it views the setup as an attempt to avoid state taxes.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.