All Forum Posts by: Joseph Palmiero

I've used mint off and on for years. It gets the job done.

Prior owner would not be relevant. Material participation is an annual test. You would also need to place the STR into service and have at least 2 guest stays to average out to 7 days or less by the end of the year. Purchasing in December doesn't give much time.

Each of you will have to qualify individually.  Difficult to qualify if you have a full-time w-2.

1 Yes, you can use your capital losses from stock sales against the remaining capital gain.

4 Yes, you could rent it for 3 years and still qualify for the gain exclusion.

Yes you can.  Make sure you take a look to see if you meet the requirements to be able to use the bonus depreciation such as achieving material participation and maintaining an average guest stay of 7 days or less.

Quote from @Alton Johnson:

Thanks @Joseph Palmiero. Just to make sure I'm clear, other than STRs, there's no other real estate investment activities that I can participate in (via LLC, personally, etc.) that can offset my W2? This is my understanding, but just wanting to make sure I'm not missing something. In other words, investing in an LLC that participates in opportunity zones, I still can't use those deductions against my W2.

That is correct.  There is one exception if your income is below $150k and you actively participate in a rental property, you can take up to a $25,000 in rental losses against your w-2.  This phases out if your income is over $100k and goes to zero over $150k.

Quote from @Alton Johnson:

Quote from @Joseph Palmiero:

If you are flipping houses, the IRS considers that you are in the business of buying and selling real estate.  In this case you can deduct a loss generated from a flip.  

The IRS treats real estate rental activities as passive with the exceptions that you talked about.  You are generally not allowed to offset passive losses with your other income such as w-2 and business earnings.

Flipping houses is not considered rental real estate.

LLCs do not change the tax outcome of your business and investment activities.

 Thanks so much for this information. What about investing in opportunity zones? I assume I can't offset W2 with those investments either, is that right?

You are correct.

If you are flipping houses, the IRS considers that you are in the business of buying and selling real estate.  In this case you can deduct a loss generated from a flip.  

The IRS treats real estate rental activities as passive with the exceptions that you talked about.  You are generally not allowed to offset passive losses with your other income such as w-2 and business earnings.

Flipping houses is not considered rental real estate.

LLCs do not change the tax outcome of your business and investment activities.

IRS Publication 925 titled Passive Activity and At-Risk Rule does a pretty good job explaining it and has some examples.  It starts on page 4 under the heading Special $25,000 allowance.

Quote from @Kaylee Walterbach:

Thanks @Joseph Palmiero. What if we used the HELOC for the down payment?

 Yes, that counts.