All Forum Posts by: Dennis Tierney

@Peter Thielemann You can forget about doing a cost segregation study. I firmly believe the bonus depreciation will shortly be toast. After what happened in Washington yesterday anything Trump did will be politically radioactive and Biden promised to repeal all of Trump's 2017 tax law so he will kill the bonus depreciation. He will have free reign to do anything he wants because of the colossal stupidity if what transpired yesterday.

The price of the cost seg study should not be that high. It is a legitimate expense for tax purposes. The amount depreciated should be 25% of the PURCHASE PRICE not the down payment. I would wait and see what new tax laws are going to be as a result of Biden being elected. He has stated he wants to get rid of Trump's 2017 tax law which will eliminate the bonus cost segregation studies so the horse may have already left the barn.

The cost seg makes the IRA distribution tax delayed on the front end. The 1031 could then be used if it is sold to indefinitely delay the tax on the back end.

@Nancy Bachety So I don't get the point of doing a cost seg on top of a 1031 exchange. You've already avoided the taxes with the 1031. The cost of the cost seg is wasted since no taxes are owed anyway.

@Nancy Bachety Remember that you have to be 591/2 or more to pull the $ out of the IRA to avoid the 10% early withdrawl penalty. I'm not sure I'm following your line of thought. Are you planning the cost seg to cover both the IRA distribution and the capital gains? If so that's going to be tough. My experience is that the cost seg covers about 25-28% of the purchase price of the new property so it will cover the 25% equity for the new purchase but probably not also the capital gain on the other sale, unless you buy 2 properties.

@Nancy Bachety Yes the distribution is the equity used in the purchase. It can be freely sold at any time but remember there will be a tax recapture on the depreciation just like when any depreciated property is sold. You can still do a 1031 exchange at sale to indefinitely delay the taxes. The cost segregation study is done by a CPA firm that specializes in them. The charges aren't that high and well worth it. There are a lot of firms that do the studies. I use one out of Kansas City that my CPA recommended.

@Ed Moran   https://www.accountingtoday.co... 

@Peter Thielemann If you open up a checkbook IRA you can bypass having the custodian handle all of the transactions. An LLC wholly owned by the IRA opens up the checking account and all of the money for the purchase comes out of and all income goes back into the checking account. I have had a SDIRA set up this way since 2006 and it works well.

Yes you can withdraw $ to live on in retirement, but, not directly. You have to arrange the withdrawl with the custodial company so they can report the $ to the IRS just like any other IRA.

@Peter Thielemann As long as the property in the IRA has been debt free for the last 13 months it can be sold with no capital gains. If it's sold with debt then the capital gains owed is dependent on the amount of debt so in that scenario you could do a 1031 to avoid the taxes on the capital gains.