All Forum Posts by: Dylan Brown

That is fantastic!

@Bill B. is spot on with the basis issues.

Of course, a deal like this is hard to turn down - you will just need to be very mindful of the tax implications of having a property with a low basis.  

Properties with a low basis like this are also ones that you have to be very mindful of the entity structure you receive the property ownership with because there are certain entities (mainly C and S corps) that can cause unrealized gains to be triggered inadvertently during future ownership transfers that may have otherwise been tax free if a different entity was involved.

@Michael Plaks I (as a fellow RE CPA) really like this write up of how to find a CPA.  Would it be alright if I linked people to that post in the future if I run across similar scenarios?

Great context.  And what a great deal!

I tend to agree with @Bill B. on his comments related to the flexibility of commercial lending versus leveraging your existing assets.

You just need to look at your entire portfolio, determine the amount of leverage you are comfortable with (for me I try to stay below 50% LTV for my portfolio, but that is more conservative than most others who are starting out).

If you still have equity to tap into on properties that could qualify for 30 year financing, I would go that route first and only tap into the commercial building's equity after exhausting all traditional residential lending avenues.

The transfer from family will certainly present some unique challenges for tax reporting, I am happy to be a resource for you there.  I will DM you!

Welcome to the community, Naga — and big congrats on the growing family!

You’re in a powerful position right now: combining your passion for real estate with the motivation of building long-term wealth for your loved ones. If you’re ready to start getting serious about your tax planning and accounting — especially with strategies that boost cash flow through tax savings and creative structuring — feel free to shoot me a DM anytime. Would be glad to help you start strong.

Wishing you all the best as you step into fatherhood and kick off your investing journey!

Welcome @Brandon Le!

I am based in MN but am totally virtual and work with clients all over the country (including NY).

If you ever are in need of some accounting/finance/tax related questions feel free to reach out.

I have a network of realtors who often send their clients my way when they need specific questions answered from the structuring side of things.

I hope you come to love the RE industry as much as many of the posters in these threads do!

-Dylan

Very cool, best of luck!

I will be giving your channel a watch.  Reach out if you ever have some nuanced tax issues you are looking for advice on.

Glad I am not the only one seeing this!

There are a few instances (especially back in 100% bonus days) where I saw properties pumping out more tax losses than dollars invested and then there was additional losses left over for the GPs who guaranteed the debt, but besides that I think every other instance of GPs getting tax losses is essentially a sham (unless there is a DRO).

Best of luck!  I service many clients in that area doing similar strategies.  Even though I am based in MN, I am fully virtual and service the entire US - reach out if you ever need anything.

Hi David,

Great question—and nice job getting a head start on organizing things!

Here’s the short version:
Even though you're cash basis, startup costs (like LLC formation, legal/admin setup, initial consultations, software, etc.) aren't deductible until the business is active—meaning the property is listed and ready for guests. So if that doesn’t happen until 2025, you’ll wait to deduct them on your 2025 return.

Once you're up and running, you can deduct up to $5,000 of those startup costs right away, and the rest get amortized over 15 years. These typically include:

• LLC formation & legal setup

• Initial marketing or software subscriptions

• Consultations with pros like CPAs or contractors

• Other admin costs before rentals start

Another win once the property is placed in service: you may be eligible for bonus depreciation if you do a cost segregation study. That could generate a large paper loss in year one (even if the property cash flows).

Quick question—are you planning to qualify for the STR loophole on this one? That can make those losses deductible against W-2 or other active income, which is huge.

I'm always just a chat away if you want to run through the numbers or make sure it's structured the right way. Feel free to reach out anytime.