All Forum Posts by: Ashish Acharya

Keep learning and tracking your numbers, and this property can be a powerful stepping stone toward building your portfolio.

One more note: Clean books and organized records from the start make everything easier, whether you stick with TurboTax or work with a CPA down the line.

@Stephen Nelson 
This is a great topic and one a lot of investors get curious about. That said, you actually cannot double-dip bonus depreciation with a 1031 exchange because the basis from the old property carries over to the new one. If you get additional basis during 1031 because you did a bigger purchase, the added basis is treated as a new depreciable basis. Depreciation only resets for the buyer who makes fresh acquisitions. The main point still stands, though: if you qualify as a REP or materially participate in STRs, those deductions can be powerful. For others, they often get suspended until they have passive income. Transaction costs and financing also need to be weighed before chasing these write-offs.

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

@Devon Morris, 

Hi Devon! Exciting to hear you’re starting your real estate journey! I also started my journey in Atlanta. It's a great market to be in. I have just a few thoughts on the next steps for you from both a practical and tax perspective:

1. Start with education + mindset: The BiggerPockets Podcast is great, but also consider joining live webinars with real investors, newsletters, and following trusted social media accounts that keep you updated on market trends, tax strategies, and financing opportunities. Staying ahead of news and numbers early will save headaches later.
2. Crunch the numbers: Before making any offer, run cash flow scenarios for rent vs. mortgage, taxes, insurance, and maintenance. This will help you determine if a house hack, long-term rental, or even short-term rental makes sense financially. Get with a lender who works with investors and educates their audience so you can understand the ins and outs.
3. Think about taxes from day one: Even on your first property, keeping clean records matters. Track expenses, keep receipts, and understand which costs are deductible (mortgage interest, property taxes, repairs, depreciation on the rental portion). Setting up a simple bookkeeping system now pays off in a big way, and this is something many investors struggle with.
4. Start small and scale: Your first property is going to be a learning opportunity, so you've got the right mindset by focusing on a manageable house-hack or rental. Once you’re comfortable, you can expand your portfolio (maybe even by using tax savings to reinvest) with more confidence and efficiency.
5. Build a support team: Even if you’re starting, it’s helpful to have a CPA who understands real estate, a real estate agent, a mortgage broker, and your mentor investor to run ideas by. That team will help you avoid costly mistakes early on.

Bottom line: take it one step at a time, stay organized with finances and taxes from day one, and lean into learning. Exciting times ahead. You’re already setting yourself up for success by being here!

Congrats on your first rental! You’ll probably be fine using TurboTax for just one property, but here’s something most people don’t think about: the first year is the most important because you’re setting your “starting point” for depreciation and basis. If that’s off, even by a little, it can snowball over time and make things really messy and eventually cost you more money when you do decide to work with a CPA or if you sell down the road.

One option you could try if you're not sure is having a CPA handle just that first year to get everything set up correctly (basis, depreciation schedules, categorizing repairs vs. improvements, etc.). After that, if you don't see the benefit, you could go back to TurboTax if you’re comfortable. That way, you’ve got the peace of mind that your foundation is solid without feeling like you’re committed to paying CPA fees forever. However, in my experience, the CPA fees typically pay for themselves when it comes to rental real estate. I always tell people that paying for a CPA is like paying $10 for a $100 bill.

If you already know you want to grow your portfolio, then it’s worth sticking with a CPA from the start. But if this is a “one and done” rental for now, setting it up right once can save you headaches later.

Really great advice above, you’ve already gotten some solid points. From a tax perspective, here’s another way to think about it:

• Flow of Funds vs. Taxable Income: Moving profits from your property improvements or lighting LLCs into the real estate LLC doesn't change your overall taxable income. All income from pass-through entities generally flows through to your joint return, so internal transfers are more about cash management than tax savings.
• Expense Allocation Opportunities: If the other businesses provide services to the real estate LLC (like lighting work or property improvements), you can structure those as legitimate business expenses with proper documentation. That way, the deductions are captured correctly.
• Self-Employment & Real Estate Professional Rules: Non-passive income from the lighting and improvements businesses is subject to self-employment tax, while the real estate income will not. Planning hours and activities carefully can make a difference between passive vs. nonpassive.
• When you have multiple businesses, don't just focus on REPS or STR. Something called reverse planning will make even better sense.
• Long-Term Structuring: S-Corp elections, holding companies, or other entity tweaks can make sense as you grow, but the key is having the framework in place for proper documentation, deductions, and intercompany transactions.

Bottom line: Instead of trying to "shift income" to the real estate LLC, focus on proper bookkeeping, documented intercompany expenses, and leveraging self-employment and real estate professional rules. Paired with the great advice you've already received, this will give you a strong foundation to scale efficiently.

Great points from everyone above and as Jason mentioned, tax laws are constantly changing, and from my experience, we’ve worked with many investors who came from other CPAs that didn’t fully grasp the nuances of real estate taxes. Sometimes important items get missed, such as cost segregation studies not being applied correctly or deductions being miscategorized, which can result in thousands of dollars being saved or lost.

That’s why it’s always important to make sure the professionals you work with share your goals and understand your strategy. Especially when you’re investing in real estate and spending money on professional services, you want a CPA (or advisor) who has the right background and experience (ideally someone who has done it themselves and truly understands the ins and outs of real estate investing).

Planning matters, but so do organized books and proper preparation. Real estate taxes can be complex, but a specialized CPA not only makes them easier to navigate, but they can also help you grow and scale while constantly educating you along the way.

That sounds like an exciting first step, congrats on getting under contract! From the tax side, here are a couple of things to keep in mind:

• Since part of the property will be a rental, you’ll be able to write off a share of expenses like insurance, property taxes, repairs, and even depreciation. That can help offset the rental income.
• You’ll just need to split those expenses between the part you live in and the part you rent out (usually based on square footage).
• Most people starting out don't bother with an LLC right away. It won't really save you on taxes—it's more of a liability protection tool. You can always revisit that once you've got more rentals.
• On the updates—roof, HVAC, solar, etc.—those will mainly help you by reducing future maintenance costs. The rental portion of improvements is depreciable, which can give you some extra tax benefit.

Sounds like a great learning property that can give you both equity and experience. The main thing is to keep good records of your expenses from day one—it’ll make tax time way easier.

Wow, I can only imagine how frustrating it must be to not only lose money on the deal but also feel stonewalled when it comes to getting back paperwork. K-1s should generally be issued each year, even if there’s no income, because they track your capital account and basis. Without those, it makes it much harder to document your loss properly.

Here are my thoughts on your questions:

1. Getting the missing K-1s – Unfortunately, if the sponsor isn’t cooperating, you can’t force them to issue past K-1s directly. Sometimes the best path is to reconstruct your basis using your original investment documents, capital call notices (if any), and any correspondence that shows contributions or distributions. A CPA can help recreate what those K-1s should have looked like so you’re not stuck.
2. Reporting him to the IRS/SEC – This can put pressure on the sponsor, but it usually won’t get you the forms you need in the short term. It’s more about compliance and accountability than solving your immediate filing problem.
3. Not including the 2024 K-1 – Leaving it out means you won’t be able to take the loss, and it could raise red flags if the IRS later receives the sponsor’s filings. It’s usually better to include it, even if you have to footnote or attach an explanation about missing prior-year K-1s.
4. Worthless investment – Yes, if the foreclosure wiped out your stake, you may be able to treat it as a worthless partnership interest or a Section 1231 loss. The exact treatment depends on the specifics of your partnership agreement and how the sponsor reported things, which is why reconstructing your basis is so important.

Bottom line: you’re not stuck forever just because the sponsor isn’t cooperating. With the proper documentation and a little legwork, you can establish your basis and claim the loss.

Wow, I can only imagine how frustrating it must be to not only lose money on the deal but also feel stonewalled when it comes to getting back paperwork. K-1s should generally be issued each year, even if there’s no income, because they track your capital account and basis. Without those, it makes it much harder to document your loss properly.

Here are my thoughts on your questions:

1. Getting the missing K-1s – Unfortunately, if the sponsor isn’t cooperating, you can’t force them to issue past K-1s directly. Sometimes the best path is to reconstruct your basis using your original investment documents, capital call notices (if any), and any correspondence that shows contributions or distributions. A CPA can help recreate what those K-1s should have looked like so you’re not stuck.
2. Reporting him to the IRS/SEC – This can put pressure on the sponsor, but it usually won’t get you the forms you need in the short term. It’s more about compliance and accountability than solving your immediate filing problem.
3. Not including the 2024 K-1 – Leaving it out means you won’t be able to take the loss, and it could raise red flags if the IRS later receives the sponsor’s filings. It’s usually better to include it, even if you have to footnote or attach an explanation about missing prior-year K-1s.
4. Worthless investment – Yes, if the foreclosure wiped out your stake, you may be able to treat it as a worthless partnership interest or a Section 1231 loss. The exact treatment depends on the specifics of your partnership agreement and how the sponsor reported things, which is why reconstructing your basis is so important.

Bottom line: you’re not stuck forever just because the sponsor isn’t cooperating. With the proper documentation and a little legwork, you can establish your basis and claim the loss.