All Forum Posts by: Michael Plaks

@Matt Rohr

For beginner investors, it's usually best to invest locally. It's not like CO is devoid of investment opportunities. 

But if, for whatever reason, you insist on investing remotely, you don't have to limit your search to local accountants. 

@Shawn Long - how does a rural ranch house compare to a downtown studio apartment? You can live in either but they are not really comparable. Same for your question.

SDIRA has strict limitations on how much you can contribute per year, but the funds can come from anywhere. You can invest it in almost anything and anywhere. You cannot be personally involved in any substantial way. 

QOZ funds can only be funded with capital gains from prior investments. So the amount is technically unlimited, but it has to originate from capital gains. You're limited in what you can invest into and where you can invest. You can be personally involved.

As you can see, they are, to some degree, the opposites. You rarely get to choose between the two, and you can use both.

Both strategies have significant tax benefits of tax-deferred or tax-free growth. 

@Luchia Park

Setting up an LLC is a legal service. In most if not all states, it is ILLEGAL for non-attorneys, including accountants, to provide legal services. Many accountants do offer this service, but they should not. Look for an attorney instead.

As @Eamonn McElroy pointed out, the rules for foreign investors are highly specialized and complex. They are controlled by Tax Treaties which vary a great deal from country to country. Make sure that professionals you choose have experience specifically in this area, and specifically for Australia.

Fiscal... what? Bhahaha. We're way past that point, Kory. 

@Luke H.

The crushing news first. If you finished your remodel in 2020, you will not get any benefits on your 2019 tax return. The entire property was placed in service in 2020, so this is when the depreciation and everything else starts. You have to wait until the next year, sorry.

To prepare for the next year taxes, please itemize your entire rehab expenses as much as possible, as in recording every invoice paid and every store purchase. If you happen to benefit from more depreciation on your 2020 tax return (which is impossible to predict without having your complete 2020 income and expenses for this property) - then you'd need to get professional help analyzing your detailed spreadsheets to maximize depreciation.

Just to be clear what the issue is: it is double-dipping. Forgiven loans are NOT taxable, and saying it otherwise is nothing but political posturing. We are NOT entitled to double dipping, not normally, and should not whine about it. Especially not us tax professionals.

Here is an article by the universally respected Tony Nitti:
https://www.forbes.com/sites/anthonynitti/2020/05/16/sba-releases-paycheck-protection-program-loan-forgiveness-application-a-deep-dive/

Quoting, emphasis mine:

"...the IRS took the shine off that “tax-free forgiveness” by recently issuing guidance that applies a decades-old tax principle to PPP loans; a principle which provides that expenses “allocable to tax-exempt income” are not deductible by the payor. As a result, any expenses paid by a borrower – to the extent those amounts are ultimately forgiven by the lender on a tax-free basis – will not be deductible on the borrower’s 2020 tax return. While this rule reaches a logical conclusion by preventing a borrower from effectively “double dipping” by receiving both a tax deduction and tax-free forgiveness related to payment of the same expenses — it served as a sucker punch to many borrowers, who had hoped for the best of both worlds based on their reading of the CARES Act. It’s possible Congress may pass a narrow amendment to Section 265 of the Code to specifically permit a deduction and double dip, but for now, no deduction is allowed..."

@Lalainya Rawlings

Perfect illustration of why you should get tax advice from accountants like @Nicholas Aiola and not from realtors.

@Mary Jay

The LLCs that are owned 100% by you do not matter for tax purposes. Transferring money between your personal and your LLC accounts does not matter and does not need to be recorded. You only need to record all business expenses, and you can use any expense tracking app for that. Google "Expensify" as one of those apps, and there're tons of similar apps.

For LLCs owned with Mom, you probably need professional help.

@Jeff Exline

There're over 20 of tax accountants actively contributing to this forum. All of us are real estate specialists working remotely. Browse the forum, see who you like and initiate contact. By the forum rules, you must initiate.

@Hong Y.

These two CPAs are real estate specialists and very active on this forum: @Nicholas Aiola and @Basit Siddiqi