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All Forum Posts by: Joseph Palmiero

Joseph Palmiero has started 0 posts and replied 151 times.

Post: Can a non-citizen spouse qualify as a real estate professional status REPs

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

Yes, as long as your spouse meets the hour requirements in a real property trade or business and you guys materially participate in your rentals.

Post: Bought Property in 2017, is it too late to start Cost Seg 2023?

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

It is not too late for a cost seg.  However, your 5 and 7 year property are already fully depreciated which will decrease the benefit.

Post: Syndication tax for members

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

You would need to maintain a seperate loss carryover for each state.  State loss carryovers can be different compared to federal due to different depreciation rules.

Post: Personal tax benefits if property is under LLC?

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

The IRS treats a single member LLCs as a disregarded entities.  The income and expenses from the investment property will be reported on your personal return.

Post: Cost Segregation Study on RV & Boat Storage building

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114
Quote from @Julio Gonzalez:

If a Cost Segregation Study had not been performed on this $3,000,000 RV & Boat Storage Building located in Fort Pierce, Florida that was purchased in 2020, it would have had first year depreciation of approximately $10,225. Thanks to the Cost Segregation Study, the property investors accelerated the depreciation that the first year depreciation was approximately $111,100.

The use of the accelerated depreciation strategy helps real estate investors to reduce the tax liability immediately which therefore increases their bottom line due to the offsetting of income. An additional benefit of a detailed engineering-based Cost Segregation Study is that it can increase potential insurance premium savings as well as provide support for the property tax appeals process. Additionally, it can help maximize renovations and improvements.

A Cost Segregation study is an IRS approved federal income tax tool that increases near term cash flow by utilizing shorter recovery periods for depreciation to accelerate return on investment. For newly constructed, purchased or renovated properties and also retroactive generally over the last 10 years, building components are properly classified into individual units of property and accurate recovery periods for computing depreciation deductions. The study identifies with forensic engineering detail the immediate Bonus Depreciation 5, 7 and 15-year personal property class lives qualifying portions of a building that are normally buried in 27.5 year residential or 39 year commercial categories.

The Cost Segregation Study was performed on the Asset Depreciation Range (ADR) and is based on a 40% tax bracket for State and Federal Taxes. The financial benefits of a cost segregation study are realized through using increased cash flow to scale your business or strengthen your portfolio which is done by maximizing the net present value through deferring tax payments.

As a reminder, bonus depreciation started to phase out in 2023. It’s 100% bonus depreciation for properties placed into service in 2017-2022, 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026 and completely phased out in 2027.


 Great information on this tax saving and wealth building strategy. Thank you for sharing! 

Post: Rental Real Estate Loss Allowance?

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

There is a tax strategy often referred to as the "Short-Term Rental Loophole". This strategy can be used to offset W-2 income. I would not do it just for the tax benefits because it can be a lot of work. It might be something to pursue if you are already interested in the Airbnb (STR) idea.

Post: STRs - Schedule E, Vacation home or Commercial

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

You would select #3 Vacation/short-term rental.

Post: S elected LLC to hire a property management company to company STR

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

I agree with @John Malone. If you want to offset your W2 income with losses from your Airbnb, you must have an average guest stay of 7 days or less and you need to materially participate in the property.

Post: Accountant looking to invest in real estate

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

I am an accountant that got into real estate.  One of my top 10 best decisions.  I wish you success on your journey!

Post: Depreciating a vehicle used for real estate

Joseph Palmiero
Posted
  • CPA
  • Pennsylvania
  • Posts 151
  • Votes 114

You can purchase a truck and use accelerated depreciation if more than 50% of its use is for rental activities.  You can also write-off your gas, repairs, insurance, etc.  Make sure you keep a daily log of your trips.

Regarding your second question - Yes, your gain would be $20,000 and it would be taxed at the rate in your tax bracket during the year of the sale.