All Forum Posts by: Jeff Nash

Yes, I use that strategy with clients when they are a good fit.  Feel free to reach out and I can help.

The tax strategies that are available to you are more limited when you are an employee and not a small business owner or a real estate professional.  There are options though, but it depends on a variety of factors and knowledge of your overall financial situation.  I would be glad to discuss.  

It can be done, but your motivation and intent when you sell the property can't necessarily be for eventual personal use, and the replacement property must be used for investment purposes for a period of time, which is 2 years or more.  There are some other considerations as well.  Feel free to reach out to me and/or I can refer you to my wife Whitney who is a qualified intermediary at Above & Below 1031. 

There is Cost Segregation Audit Technique Guide (Publication 5653) that I think @Greg Scott is referring to, and here is a few noteworthy excerpt:

"The preparation of cost segregation studies requires knowledge of both the construction process and the tax law involving property classifications for depreciation purposes. Unfortunately, there are no prescribed qualifications for cost segregation preparers. However, a preparer’s credentials and level of expertise may have a bearing on the overall accuracy and quality of a study. In general, a study by a construction engineer is more reliable than one conducted by someone with no engineering or construction background. However, the possession of specific construction knowledge is not the only criterion. Experience in cost estimating and allocation, as well as knowledge of the applicable tax law are also important criteria."

So it appears you probably have the requisite technical expertise based on your engineering background, but your level of tax knowledge and it's application would have to be demonstrated.  Perhaps you can just collaborate with a CPA to bridge any knowledge gap and perform the detailed work nevertheless.  Hope this helps. 

I completely agree with @Chris Picciurro regarding the value proposition and having 2 separate engagements - one for tax preparation and one for tax planning.  Every situation is unique and I always recommend just reaching out to a few CPAs so you can share more information about your particular circumstances and they can provide their feedback.      

Disregard.

Assuming your rental activities are considered a trade or business (many court cases address this issue), you would likely benefit from the home office deduction (Form 8829) and be able to deduct the prorated amounts of mortgage interest, property taxes, utilities, depreciation, etc. based on the proportion of your home office square footage to the total square footage of your personal residence.  I'm assuming obviously that you have a home office and dedicated area used exclusively for business (i.e - not a common area like a dining room or living area where you just happen to work on real estate activities). 

In most situations you are limited in your ability to deduct personal expenses as business expenses unless your are able to recharacterize them like in the home office scenario. There are other things you could do with your home to some extent, but that depends on your overall situation (i.e. - are you a W-2 employee with 4 rentals or self-employed and/or a real estate professional).  

As was noted on this thread, changing the ownership of your home into an LLC does not help you and actually may cause other issues.

It sounds like you are describing a series LLC. If that's the case, I would just work with an attorney to include the proper verbiage in a company or operating agreement to ensure it is set up properly. This would be state specific as an LLC, so the language needed or set up might be different depending on the state or states you operate in. For banking purposes you also want to ensure you are maintaining the integrity of the transactions and keeping them segregated.

Hi Nick, I am familiar with the structure and set those up for clients. The way I read it the LLC was outside of the IRA as an investment holding company (not owned by the IRA) being invested in by the self-directed IRAs. Basically a self-dealing situation.

"Traditional IRA buys all C-shares and Roth IRA buys all P-shares of the LLC."

This appears to be a prohibited transaction - https://www.irs.gov/retirement....

You have made quite an effort to outline the fact pattern and I would have to study it further, but I think this is an issue if I understand it correctly.

If you have any other questions feel free to reach out.

Thanks!