All Forum Posts by: Michael Plaks

Quote from @Todd Lawrence:

Would buying a rental this year with 100% bonus depreciation would offset the gains from the sale of a rental?

my tax professional told me that it will not help reduce the 400k of realized gains I’ll have next year because of a recent sale.

It would not offset it but it would help.

100% bonus depreciation does not apply to your entire purchase. It only applies to some parts of the property that have shorter depreciation period than the building. This part might be 20-25% of your total purchase but not 100%.

And identifying these portions normally requires performing a cost segregation study:
https://www.biggerpockets.com/forums/51/topics/1075919-five-...

Quote from @Ned Carey:

I have no recommendation but do you qualify to use the additional depreciation against ordinary income? Do you meet the strict requirements of a "real Estate professional" 

One does not need to qualify as a real estate professional to benefit from cost segregation on STRs, but there are other required qualifications:
https://www.biggerpockets.com/forums/51/topics/1075919-five-...

@John Cezar Dimaano

When you are just starting, you really do not need to spend thousands on "setting up your business" and on your personal tax strategist. Spend $50 on Bigger Pockets tax strategies books to learn some basics, and then focus your time, energy and money on what really matters: finding and acquiring properties.

But if you really want to start working with a tax strategist right away, here is how to find one:
https://www.biggerpockets.com/forums/51/topics/1222774-expla...

@Kolin Goff

Reach out to these people:  @Bernard Reisz   @Yonah Weiss  @Julio Gonzalez

Each of them operates a reputable nationwide cost segregation company and is active on Bigger Pockets

Quote from @Jimmy Nguyen:

Awesome. Thanks for the advice. I'll do more research on the forums. I suppose having a CPA in a different state isn't that out of the ordinary?

Also,do I use the Tax and Professional Services Finder tool featured here under "Build Your Investing Team"?  Or is that an outside service advertising on BiggerPockets?  Thanks. 

I answered both of your questions here:
https://www.biggerpockets.com/forums/51/topics/1222774-expla...

Quote from @Jimmy Nguyen:

Hi,

I have two AirBnbs and a duplex which I get historic rehab credits on.  I am also building a new AirBnB and hope to finish it by end of 2026.  I would like to work with a CPA that can help me optimize my taxes taking into account the rules and potential new legislation around bonus depreciation and cost segregation.  Thanks so much.  Much appreciated.  

There're over 20 of us here on this forum. Browse the forum, find experts who you want to work with and reach out.

Notice: we're NOT allowed to offer you our services as long as your post stays on the tax forum, although some people are going to ignore this rule and offer you their services anyway. By rules, YOU must initiate the conversation.

Please read this:  https://www.biggerpockets.com/forums/51/topics/1222774-expla...
and this:  https://www.biggerpockets.com/forums/51/topics/1122635-the-s...

Quote from @Heidi Kenefick:

@Michael Plaks thanks for your reply, that’s a good article.

I will still pass material participation for my STR's based on the number of hours I put in for my other STR properties. The law doesn't say it has to be 100 hours per property…. Just 100 in total. Plus more than anyone else. It sounds like a co-host would still be allowable so long as I work more than them!

Yes, you may be able to make a grouping election to combine multiple STRs into a single activity. Then indeed you will need to pass the material participation test for the combined STR activity and not by property.

Such an election a not a no-brainer, it has nuances. Since you use a CPA, it's their job to guide you through these details.

Quote from @Heidi Kenefick:

I’m purchasing my first Airbnb that isn’t local to me. I plan to cost segregate and bonus depreciate it, as I did with the ones that are local to me. Given that this property is 300 miles away- I’ve considered using a property manager or co host. If I do that, can I still utilize the short term rental loop hole?

I ask because last year when I categorized my expenses I listed fees for hospitable as a management fee and my CPA told me I cannot have management fees if I am doing the STR loop hole.

The answer is, as usual, "it depends." 
Read this post's Myth 4:  https://www.biggerpockets.com/forums/51/topics/1122635-the-s...

It is more difficult to pass the material participation test when you use a management company, but it is possible. Your CPA should guide you through the requirements of material participation.

@Joseph Coleman

You now have two tax professionals, and it seems that you do not trust the competence of either one of them. Kinda defeats the purpose of working with a tax professional, no?

And you are also hoping to understand it better than tax professionals by some quick reading and - the least useful route of all - calling the IRS. Not going to work this way, sorry.

Also, you cannot switch from STR to MTR mid-year. The average days of use is an annual calculation. Your property either qualifies as an STR for an entire year, or it does not. No going back and forth.

Thank you for tagging, @Ned Carey

@Art Webb - I answered your question here, with a correction made by someone in the comments:

https://www.biggerpockets.com/forums/51/topics/1236688-expla...