All Forum Posts by: Joshua Thompson

Dennis,

I like where your head is at trying to find tax strategies! Unfortunately, here you have quite a lot going on and maybe misinformed on a few areas. You'll also want to look into the opportunity zone, as of now they expire December 31st 2026 meaning any deferral of tax comes due at that time unless Congress extends it. I have not heard of an extension as of yet.

Your 100 hours is related to material participation for STR not the real estate professional status, they are two separate items but in a way can be connected (kinda).

I'm not sure what you mean by "sell it for no bonus depreciation recapture" because you are required to take depreciation, if you don't the IRS should calculate your tax as if you did.

Your head is in the right place and I wish you luck but would highly recommend consulting with a tax professional before proceeding if this is your plan.

Best of luck Dennis!

 Of course, good luck man! I would recommend getting a referral from other investors as well if you want to find a new relationship.

Brandon, I know this isn't the advice you're looking for but a good tax professional is worth their weight in gold and I'll be honest their quote can be reasonable. I don't know the entire situation so I say can be reasonable. Many colleagues I've spoken to start at $1,200+ and I've learned the hard way, you get what you paid for.

Unless you have a tax background I would not recommend tackling these returns yourself given all you're doing and if you plan to add more partnerships in the future it's even more important you work with a tax professional you know, like, and trust.

I've seen people in the same situation to save ~$3,000 in prep fees, did the return themselves, then received a $120k IRS notice of change to their return. They panic then have to pay someone to do an amended return and get a POA to figure things out with the IRS.

Hi Jojo, welcome to BP! Congratulations on your multi-family investment. I would highly recommend reaching out to a tax professional you see active in the forums but most of us are remote. You can also ask local real estate investors for tax professional recommendations. Lastly, BP has a feature called "build your investing team" in which you can ask to be connected with a tax professional.

Good luck!

It's typical and recommended one tax professional handles the entire filing. Splitting it between multiple tax professionals can create a headache. If you're worried about their knowledge in a specific state ask questions regarding that during your interview. If you're still worried go with the accountant in the state you are most worried about and plan to own the majority of your properties in.

Hi Heidi,

To add to everyone's response a great referral from any other investors you know is also a great place to start! If unsuccessful I know BP has a Build Your Team feature at the top and it's completely free to you. You can choose to match with an accountant there as well.

This might be a time you can look into creative financing but once the property changes owners most counties will reevaluate property taxes based on the sale price. It varies from county to county on how they handle it and some give great exemptions or a flat reduction to value. 

The best thing to do is contact the county tax assessor explain the estimated purchase price and ask how this will impact the annual property taxes. They may or may not answer this but it would help a lot. Also, look at neighboring properties that have recently sold within the last 2 years near the purchase price and what their property taxes are.

Good luck!

Of course! Good luck and I hope someone else also chimes in for you!

Hi Matthew,

This is a great and valid question! Being a tax professional I would say currently it doesn't sound like something you need just yet. Regardless a consultation or meeting with a tax professional will provide a TON of value and information but if you're 6 - 12 months out from determining if you'll make these big moves then it might be a bit early. Now this might be an unpopular answer compared to my colleagues but it might not be necessary just yet especially if you're savvy and know a bit about taxes. 

Now if you have other major things going on in your life then yes by all means I would recommend meeting with a tax professional yesterday but it might be a bit early. However, there is nearly 0% downside to meeting with a tax professional early and building that relationship. It wouldn't hurt if you wanted to do that now as they could provide good information as you move forward and make decisions.

Benefits: building a relationship, shopping firms to get the best fit, knowledge regarding big financial decision before they occur, knowing if  you're making any major mistakes, determining if your plans will actually help you tax wise 

Summary

It might be too early but only something good can come out of a meeting with a knowledgable tax professional earlier rather than later.

Hi Art, when buying real estate in a Self Directed IRA it's typically recommended the property is paid in cash and holds no debt. If there is debt on the property you run into the debt-financed property issue which can cause the rent to be treated as UBIT and be subject to the trust tax rate which increases to 37% extremely fast.