All Forum Posts by: Jason Malabute

Hi Ellen, typically, to claim mileage deductions on your taxes for travel to properties, you would need to either own the property or it would need to be your job, like if you were hired as a property manager. In your case, since your parents own the properties and you’re helping them out, you may not be able to claim those deductions unless they pay you for your services. As Bill suggested, one way to handle this could be for your parents to pay you as a contractor. That way, you could claim the mileage as a travel expense for the work you’re doing on their behalf. And just like Bill said, if they pay you less than $600, they don’t need to issue a 1099

Using a Roth IRA for multifamily investments offers tax-free growth, but you lose the ability to claim depreciation deductions

If you’re not an  investor yet then those travel expenses wouldn’t be deductible. If you are a real estate investor currently already then yes  the travel expenses  are deductible.

Hey Hunter, I’ll save you some time here. You can’t really predict how much your property taxes will go up, not even the county can give you an exact number until it’s reassessed. I’ve invested in Indianapolis, Atlanta, and looked into Kansas City, and every county is different. Some reassess taxes when a property is sold, others do it yearly or every couple of years, regardless of sales.

You can ask the county assessor how they handle reassessments and whether it’s tied to sales or a regular schedule. You can also request the average property tax increases over the last 5 years to get an idea, but that’s not always a strong indication of future increases. Sometimes counties haven’t kept up with rising market values and get more aggressive later. Other times, they’ve been aggressive in the past and slow down later, like in some Kansas City areas right now. And in places like Los Angeles, taxes are based on a specific percentage of  assessed value.

So it really depends on the county!

Hope that helps!

Yes, even if the seller finances the real estate deal, that does not prevent you from taking advantage of the tax benefits associated with owning rental property. You can still depreciate the property, perform a cost segregation study if applicable, and deduct ordinary and necessary expenses related to being a landlord.

Hi Matthew,

I’ve been a CPA since 2015, working in tax and accounting since 2013, and I’ve been a real estate investor myself since 2018. From my experience, you don’t need to engage a CPA just yet. At this stage, your focus should be putting as much money as possible into your first deal, rather than on accountants, lawyers, or consultants.

Hiring a CPA can wait until you’re further along—either when you’ve got something under contract or need help with entity setup or tax planning. Right now, it’s too early for that, especially since you’re still in the learning phase. As an entrepreneur, especially during the startup phase, the goal is to minimize expenses and put most of your money into real estate deals.

Don’t let the absence of a CPA stop you from moving forward. Focus on getting into that first deal—everything else can fall into place after.

Best of luck with your investing journey!

Jason Malabute, CPA

1. Yes, you can take advantage of bonus depreciation if you structure it properly, even with a partner, through a simple LLC or partnership agreement. Both partners typically share 50% of the tax benefits.

2. Bonus depreciation applies to offset any income, not just W-2 income, including passive or active real estate income.

3. Yes, if you don’t hold the property long term or exchange it (e.g., through a 1031 exchange), you may have to recapture the depreciation upon sale.

4. Switching from long-term to short-term rental (STR) applies for the full calendar year when calculating depreciation benefits.

5. Using co-hosts may help, but be cautious of the 100-hour requirement for material participation.

Hi Dave,

I understand why you’d want to handle your own taxes, whether it’s a personal preference or just comfort with your finances. However, as others have mentioned, it’s not common for tax professionals to review just one form, like the 8824, without seeing your entire tax situation.

1031 exchanges can get complicated, and reviewing only part of the process might lead to errors or missed details. That’s why most professionals would need to look at everything, not just one part, to give you the best advice and ensure no mistakes are made.

Hiring a professional might cost more upfront, but it’s worth it for the peace of mind and to avoid potential tax issues down the road.

Best regards,

Jason

Chris, I can really relate to this question because back in 2021, I sold my single-family home portfolio to get into multifamily investing. While selling your properties could provide the liquidity you need, you definitely want to consider the tax implications, especially if any of the properties were held for less than 12 months, as those will be taxed at a higher short-term capital gains rate.

However, if selling isn’t your only option, I would strongly recommend looking into a cash-out refinance. This could give you access to the cash you need without selling the properties. You get to keep the rental income, continue building equity, and the money from the refinance isn’t taxed since it’s considered a loan, not income. If the rental income is still strong after the refinance, you’d have a great setup—cash in hand and properties still appreciating with tenants paying off the loan.

It’s definitely worth considering this strategy before deciding to sell off your entire portfolio. Hope that helps!

Yes, it is possible to use profits from another business to invest in real estate. However, you need to consider how that income will be taxed and any potential benefits from investing in real estate. Real estate offers several advantages, such as tax deductions through depreciation, appreciation, and the potential for cash flow. Many investors also appreciate the ability to use leverage in real estate deals.

Real estate can be a strong strategy for preserving capital because of its tax advantages and growth potential.