All Forum Posts by: Michael Plaks

The publication and our responses assumed buying a rent-ready property. Here you start getting into the inevitable complexities, and we can't give you a comprehensive lesson online. This is what you hire your own tax accountant for.

You're right, all costs during the initial rehab should generally go into basis and are not immediately deductible. By the way, you should be using a special insurance for the rehab period, not the regular insurance which is for the occupied properties. And tax treatment of loan costs on the rehab funding, which is usually hard money, is controversial. Sorry, cannot give you a more specific advice in an online post.

@Stuart M.  This is a perfect explanation assuming that this is what the IRS meant by their clumsy wording "Rent or other charges relating to occupancy of the property before closing."  Notice that it is listed under costs, as opposed to credits. Prorated rent received from the seller is common, but it is a credit, not cost. 

@Stuart M.

#1 is usually a deductible expense

#2 is a personal non-deductible expense, meaning the rent you paid to the seller for the right to use the property before you closed (a strange item anyway)

#3 are loan costs that are amortized over the length of the loan, similar to depreciation

@Courtney Duong

If there was no activities, income or expenses in 2019, then generally speaking you do not need a partnership return.

Exceptions to general rules are always possible though.

@Account Closed

Here's an analogy. Say you're taking a new hobby like biking, photography or golf. If you're starting it casually, you probably do not need expensive equipment initially, and you can grow into it. 

On the other hand, if you're planning to go pro, you might want to gear up with the top quality up front, despite the high price tag.

@David Saxton

$1,700 for rentals in 4 states is pretty reasonable, in my opinion. You can find it cheaper, and you can find it more expensive. What is far more important is whether your CPA is doing a good job which is not directly related to his charges.

Lack of strategy sessions that you mentioned brings a question - did you ever ask? Does he offer tax planning? If he does - is he competent to provide such planning? 

You may or may not have a good CPA on your team, but it's not about $1,700.

@Navid A.

If the partnership agreed in its operating agreement to reimburse partners for driving, then it should reimburse Partner 1, and the mileage ends up a partnership deduction and split 50/50, in the year of the reimbursement. This is rare and not recommended for partnerships.

Normally, it is what @Kory Reynolds described.

Might have to wait longer for the next top nowadays :)

@Account Closed

So you insist, fine. 

Tax preparation for what? Family with some personal stuff and couple rental properties on the side? Pure tax preparation can range from $200 to $2,000 for this job. Depends on how much personal complications there are, on how well your data is organized, on the need for state returns, on your geographical area and, only lastly, on the charges level of your accountant. 

There is still no way to compare the full service apples to apples. 

Also, a firm that charges everybody the same price is a red flag in my book. It means that the smaller clients are probably overpaying to cover for the bigger clients. But this point is my own and is debatable.

No such thing, because the services are drastically different between accountants. It's like asking what's the average price of a restaurant meal. What kind of meal? You can ask about the avg price of burgers but not of full meals.