All Forum Posts by: Michael Plaks

@Anna Smith

This board features over a dozen of tax accountants who specialize in real estate. Most if not all of us work with clients remotely, nationwide. There's not much benefit with having a local CPA these days of technology.

So you can browse this forum, find who you like and contact privately.

@Elsa Liu

The danger in answering this question is that there's enough small print in these rules to swing the answer either way. The only way to have a definitive answer is to have a detailed one-on-one discussion.

That said, a tentative generic answer to both questions is yes. You do need to file separate returns for this to work, and the gap between A and C must be 24 months.

Keep in mind that filing separate returns usually increases your combined tax, so while you win in one area, you lose in another. Can you do it while filing joint returns? Possibly, but we would need to discuss the details.

To avoid confusion: I refer to "married filing separately" filing status, not "single" status. You cannot file as single while being married.

The simplest way to explain is: active is where you continuously contribute labor (Realtor, contractor, wholesaler, flipper); passive is where the money is made while you're doing something else (landlord)

Hi colleagues,

There is an upcoming webinar on July 24 "Depreciation and Expensing: New Rules and Limits Under Current Tax Law" focusing on Section 179 and 100% bonus.

It is intended for CPAs and attorneys, but some advanced investors may find it interesting, too. Just make sure that you have solid tax background, because it is a rather technical presentation.

I have couple free passes - hit me up privately if interested.

Yes, it will count. SS planning is a different game altogether.

Contributing to SS was one of those possible "good reasons" I implied.

Ask a local Realtor  

@Dustin Awtrey

You leave us guessing what is "this project." My guess is that you're rehabbing a small multi-unit property which will be rented.

If my guess is correct - you do not need to pay yourself salary. Your income will be taxed as regular passive income, and you can transfer money out of your business bank account to your personal bank account anytime, probably monthly. The transfers do not create any additional taxes.

Yes, you could also structure it in a more complicated way, with an actual salary, but you need a good reason to do so, which is a longer conversation.

Maybe you need an upgrade then 

Roth IRA almost every time. The difference is - would you rather pay taxes on the seeds (Roth) or on the harvest (Trad.)?

Yes, harvest comes later, and you do "save" now by not paying taxes on the seeds. However, with Roth, you will pay taxes on the harvest eventually. If your seed is $5k, and your eventual harvest is $100k - you will always win with Roth.

@Sean Ratcliff

<inserting foot in my mouth>

@Dave Toelkes was right, and I was wrong, sorry. We take non-qualified use after 2009, but we divide it by the TOTAL ownership period - which is better for you.