All Forum Posts by: Kevin Aumack
Kevin Aumack has started 1 posts and replied 23 times.
Post: MFJ, plan to live separately. Can we claim two primary homes for tax purposes?
- Glassboro, NJ
- Posts 30
- Votes 8
Hi Stephanie,
Yes you can claim certain expenses for tax purposes. Primarily, you would be able to deduct the mortgage interest and property taxes if you're going to use it as a second home.
There may also be some other deductions I am not thinking of right now and the picture would definitely change if you were going to use one of them as a rental.
Post: 100% Bonus Depreciation Is Back
- Glassboro, NJ
- Posts 30
- Votes 8
Also, big shoutout to the SALT cap increase from $10K to $40K! This will push way more people to itemize, especially those in lower-tax states who can bunch property tax payments to maximize deductions. Definitely a smart move for many taxpayers.
Post: Tax Planning for a REI with W2 income
- Glassboro, NJ
- Posts 30
- Votes 8
Quote from @Michael Plaks:
Quote from @Abhishek Joshi:
I wanted to seek help on "proactive" tax planning from qualified professionals . Our family profile is W2 wages , and a few LTR properties. FWIW, we have been breaking even on those properties more or less over the past decade. How could we plan better, particularly as W2 income earners, so that we could legally save on our tax obligations with some smarter planning. I thank you for taking the time for reading my post, and for your inputs on the same.
I'm going to tell you something you don't want to hear, because there will be plenty of people FALSELY promising you what you want to hear.
Two full-time W2 people with long-term rentals are basically limited to breaking even where you already are. No extra depreciation, cost segregation blah blah blah is going to help.
In order to overcome those limitations, you would have to either drastically change your business model to short-term rentals (which sometimes may not be feasible at all or may be detrimental to your business) or drastically change your lifestyle (such as one of you quitting your W2 job and becoming a full-time investor.)
If you are willing to explore those drastic changes - sure, an experienced tax professional like myself and my colleagues on this forum can help.
But if you're hoping that somebody will teach you "secrets" of how to reduce your taxes in your CURRENT (W2/LTR) situation - there're none, outside of general tax planning like maximizing your retirement contributions etc.
Hey Michael, the information the other accountants have provided are not false at all. They are legitimate tax strategies, as you mentioned, that would require changes to what is currently being done to a more tax advantageous plan. I think that's what any person would want to hear, are the options that are available, whether or not they are put into play is a different ballgame. Becoming an active participant in a short term rental really wouldn't require any significant changes in lifestyle, I'm doing it right now without the use of a property manager which would alleviate even more of any hassle.
Post: Cost for STR Accountant (Strategy, Planning, Filing)
- Glassboro, NJ
- Posts 30
- Votes 8
Quote from @Kyle Anderson:
Hello Friends,
I am new to the STR game and I recently bought my first place a couple weeks back. I am in the hunt for an accountant that understands STRs and can help me plan, strategize and file. What is the typical yearly cost for something like this for one property. I got quoted $4,000 with the first accountant I met with. Does this feel right?
Cheers,
Kyle
As the others have mentioned, it is hard to say whether that is a good or bad price without knowing what services are included. If that's the first year fee to set up your business, do the monthly bookkeeping, do your tax planning and strategizing, and file, it may not be a bad price but again you aren't going to most likely have a lot of activity the first year, so I'm assuming you guys are planning on a lot of strategy. It would be best to get a scope of the services you'll actually receive, like 1 strategy session per month or something similar so you know the price is justified.
Post: Tax Planning for a REI with W2 income
- Glassboro, NJ
- Posts 30
- Votes 8
Quote from @Denver McClure:
Highly recommend chatting with @Ben Trageser or @Jeff Nash when you can. They can help out!
Hi,
I will start with the rental property side of things. Considering you are pretty much breaking even already and that the properties are held for long-term use, there may not be much room to save there are the moment. You both are W-2 and any passive losses are carried over.
If you wanted to get more strategic with your properties, you could turn them into short-term rentals and try to qualify for active participation status. This would allow you to take $25,000 in rental real estate losses, so if you take advantage of the new 100% bonus depreciation rule or maybe look into a cost segregation at that point, it could make sense.
As for trying to reduce the rest of your tax bill, make sure to keep track of all your taxes paid now that the SALT cap has been raised to $40k. You might want to consider "bunching" your property taxes in one year for example, then take the standard deduction the next year.
You may also consider doing the same bunching strategy with charitable contributions.
Further, if you have a company 401(k) and/or HSA, you can contribute more money to that in order to reduce your income.
There may be additional opportunities available depending on your complete scenario, but these are just a few options!
Post: Hey Everyone – Real Estate Bookkeeper Here to Add Value!
- Glassboro, NJ
- Posts 30
- Votes 8
Thanks Max, nice to meet you!
Post: Tax Advisor / Strategist
- Glassboro, NJ
- Posts 30
- Votes 8
Hi Liz, You should consider expanding your search to outside of California. Also, talk to someone in your network who knows someone reliable, etc. If you think someone may be a good fit, give them a shot and see how it goes, you can always pivot again later.
Post: Splitting Travel Expenses for two prope.rties
- Glassboro, NJ
- Posts 30
- Votes 8
Hey Chris,
I would start by allocating the direct expenses to the properties you know they correlate too. Then, just allocate the rest based upon the nights. For example:
Breakdown:
Mileage:
Home to Property A = $300 (allocated fully to Property A)
Property A to Property B = $100 split by days (2 days at A, 3 days at B) → $40 to Property A and $60 to Property B
Property B to Home = $300 (allocated fully to Property B)
Lodging:
Two nights at Property A = $300 (fully allocated to Property A)
No lodging cost for Property B (stayed with family)
| Property | Mileage | Lodging | Total |
|---|---|---|---|
| Property A | $300 + $40 = $340 | $300 | $640 |
| Property B | $60 + $300 = $360 | $0 | $360 |
| Total | $700 | $300 | $1,000 |
Post: W2 Tax With Holding Advice, house hack
- Glassboro, NJ
- Posts 30
- Votes 8
Hey Josh,
I wouldn't change anything yet, just keep withholding as normal.
Once your tax guy runs the actual numbers for your entire situation and the performance of the property, then may be a good time to adjust.
Post: Is it possible to write-off repair expenses on a sold home?
- Glassboro, NJ
- Posts 30
- Votes 8
Quote from @Anthony Pollachioli:
Quote from @Kevin Aumack:
Quote from @Anthony Pollachioli:
Sold my home FSBO, the buyer wanted help paying for repair work needing to be done that came up on inspection report. This was not listed in our closing contract.
I don't mind splitting the cost of the repair by paying the contractor directly, but have tax concerns. Because this was not listed on the closing contract, it will look like I made more money from the sale than I actually did.
The sale closed on 4/29. I know I am in no way legally responsible to pay for the work to be done, but in the interest of being a decent human I agreed to pay some of the repair cost as long as there is a way to navigate the tax implications. Any tax experts know how or if it is possible to write off the repair cost? A lender told me I could have the contractor write me up a separate invoice for the amount I agreed to pay, and document well the address and reason for paying the repair costs, and then I could write it off. Hoping to gain some more information.
Thanks!
Hey Anthony,
Since the sale has been closed, I would get an invoice for the work done and document the communication of the agreement to split the costs. You can then provide this information, along with the original closing document, to you accountant. Your accountant should then be able to make a manual adjustment in their tax software for this work.
However, was this your primary home? If so, the repair expenses may make little difference in end anyway since you are allowed capital gains exclusion (250k single, 500k joint).
Hope that helps!
Yes actually this was my primary home. I didnt know about this exclusion, the home was sold for right around that amount also. So if filing single, I can write off 250k for the sale of a primary home?
Yes you would be able to write that off. There are several rules (as always), but mainly if you lived in your house for 2 out of 5 years you're good to go! For simplicity, lets say you bought the house 20 years ago for 100k, now you sold for 250k, thats a 150k capital gains exclusion, which is well within the 250k limitation so you would have plenty of room and there would be no tax due on the sale. Most states follow this exclusion as well, but there may be some differences depending where you live.