All Forum Posts by: Jason Malabute

Did Dave Mayer publish a "State of the real estate market " for 2024 or 2025 like he did for 2023? If yes where can I get it? If no, where can I get the updated all of the stats to update it for 2025??

Hey Travis,

Since your rental is considered passive and your AGI is over $150k, you can’t use the losses to offset your W-2 income. However, you can still use the losses to offset other passive income or carry them forward to offset gains when you sell the property.

There are two main exceptions where rental losses can offset W-2 income:

1. Real Estate Professional Status: You or your spouse must spend at least 750 hours per year on real estate activities, and it must be your primary occupation.

2. Short-Term Rental Loophole: If your average guest stay is 7 days or less and you materially participate, it’s considered non-passive, allowing losses to offset W-2 income.

Track all your expenses because disallowed passive losses carry forward to future years and can be used to offset future rental income or capital gains. Let me know if you have any more questions!

Yes, you should be able to deduct the property taxes and utilities, but only if the property is considered a rental property (either currently rented or actively being held out for rent).

As for travel costs related to purchasing the property, those are typically not deductible as rental expenses, but they can be included as part of your cost basis in the property, which could reduce your capital gains when you eventually sell. Travel expenses are deductible once it is rented. I would recommend speaking to your tax professional to ensure you’re handling it correctly and maximizing your deductions.

Michael is right if it was never rented then it is not a rental so no you can't have a rental loss 

If you're planning to do business in California, it doesn't really matter where you set up your LLC — California will still want their money. This is a common misconception. Even if you form your LLC in another state like Montana or Texas, if you're operating, managing, or generating income from properties in California, the state will require you to register as a foreign LLC and pay the $800 annual franchise tax, among other requirements.

It really depends on the county where your property is located. Some counties allow you to contest the assessment and successfully get a reduction, while others won’t even entertain the question.

For example, I have a property in Atlanta, Georgia, in Clayton County, and when I tried to get a property tax reduction, the county outright told me they wouldn’t even consider it.

When that happens, your only real option is to hire a lawyer who specializes in contesting property tax assessments. However, you have to weigh the costs—does the amount you’re paying the lawyer justify the potential savings? And if so, what’s your realistic chance of winning the appeal?

If your property’s tax increase is substantial, it might be worth consulting a specialist to evaluate your options.

Hey Eric, yeah, a lot of what you're describing sounds like it could run into self-dealing or prohibited transaction issues with an SDIRA. The IRS has pretty strict rules about not personally benefiting from IRA investments, and even though your fiancée isn't technically a disqualified person like a spouse would be, the whole setup might still raise red flags. Things like managing renovations, furnishing the property, or helping with cleaning could be seen as providing services, which isn't allowed. Staying at the property or forgiving loan terms could also make it look like you're indirectly benefiting from the deal, which the IRS doesn't like. Even if the SDIRA itself didn't buy the property, they might still see it as a workaround that breaks the rules. If the IRS decides it's a prohibited transaction, the whole IRA could become taxable, plus penalties—definitely not something you want. Best bet is to check with a tax pro or SDIRA custodian before moving forward just to be safe.

Great question! Determining whether you can claim real estate professional status (REPS) on your tax return mainly comes down to two key requirements:

1. The 750-Hour Rule – You must spend at least 750 hours in real estate-related activities (like managing rentals, acquisitions, rehabs, etc.).

2. More Than Half Your Time – You need to spend more time in real estate than in your W-2 job or any other work.

Since you have a full-time W-2 job, the second requirement is usually the bigger challenge. If you work 2,000 hours a year in your job, you’d need at least 2,001 hours in real estate to qualify—which is tough.

However, even if you can’t qualify as a real estate professional, you may still be able to deduct rental losses if you materially participatein your real estate activities. Here’s how:

• 500-Hour Rule – If you spend 500+ hours on a rental activity, it counts as materially participating.

• 100-Hour Rule – If you spend at least 100 hours on a rental and more than anyone else, you qualify.

• 10% Rule – If no one spends more than 500 hours, but you do at least 10% of the total hours spent, you qualify.

A key strategy some investors use is grouping elections—this lets you combine multiple properties into one “activity” for tax purposes, making it easier to hit the participation thresholds.

If you can’t meet any of these rules, your rental losses might be considered passive and limited. But if you (or a spouse) qualify as a real estate professional or meet material participation, you can unlock potential tax benefits.

Hope that helps! Let me know if you want to dig deeper into any of these rules.

I want to clarify that I don't fully understand the question, but here's a general guideline. Since the LLC was set up in 2024, you would need to file taxes for the entire year of 2024, regardless of the November formation date. However, you only report the income and expenses for the months in which the LLC had activity.

If your rental properties only had income and expenses in November and December under the LLC, then you would only report those two months. However, if the property had income and expenses for all of 2024, then it depends on when the property was transferred into the LLC.

• If the property was transferred into the LLC in November 2024, then income and expenses before November would typically be reported on your personal Schedule E, and only November and December would be reported under the LLC.

• If the property wasn't transferred to the LLC until 2025, then none of the 2024 income and expenses should be reported under the LLC.

So ultimately, the key factor here is: when was the property officially transferred to the LLC? That determines how you allocate income and expenses. As others have mentioned, how the LLC was set up also plays a role, so consulting a tax professional is always a good idea.

It depends. Based on the information provided, it's not entirely clear whether the LLC had any business activity in the year in question. If the LLC had no income, expenses, or operations, then filing a final return with zero activity may be appropriate. However, if any transactions occurred in the LLC—such as collecting rental income or incurring expenses—then it likely needs to file a partnership return (Form 1065) to report that activity.

Additionally, the IRS generally expects a multi-member LLC to file a return unless it has been properly dissolved. If the rental activity was conducted entirely outside the LLC (i.e., in your personal names without any formal agreement between the LLC and the titleholders), then reporting on Schedule E may be appropriate.

Ultimately, you may want to consult a tax professional who can review the specifics of your situation, including whether the LLC has been officially dissolved and if any tax elections were made. Without more details, it's hard to give a definitive answer