All Forum Posts by: Mohamed Youssef

@J Giraldo I will be happy to help. Please feel free to check out my business profile and let me if you have any questions.

Hi@Lenny B. we are a real estate CPA firm based in CA. Please feel free to check out my business profile and website and let me know if there is anything we can help you with.

Hi@Paul Fogarty, my firm meet all the requirements. Please feel free to check out our business profile and website and let me know if we can help with anything.

The recently enacted "One Big Beautiful Bill Act" brings significant tax updates directly affecting you and your investments. Here are the key highlights:

• 100% Bonus Depreciation Restored. Immediately deduct the full cost of property improvements, renovations, and qualifying assets. This is excellent news for managing cash flow and accelerating property reinvestments.
• Qualified Opportunity Zones Made Permanent: The Opportunity Zones program is now permanent, providing ongoing benefits such as deferring or eliminating capital gains through targeted investments.
• Permanent 20% Qualified Business Income (QBI) Deduction. Continued availability of this substantial deduction for pass-through entities (S-corporations, partnerships, LLCs), now accessible to more businesses due to higher income thresholds.
• Increased SALT Deduction Cap The deduction limit for state and local taxes significantly rises from $10,000 to $40,000, greatly benefiting those in high-tax jurisdictions.
• Expanded Child Tax Credit Starting in 2025, families will see an increased refundable credit of up to $2,200 per child, benefiting many households.

Other notable updates:

• Higher and permanently extended standard deductions.
• Permanently lower individual tax rates from the 2017 tax reforms.
• New deductions specifically introduced for seniors, overtime pay earners, and interest on auto loans for U.S.-manufactured vehicles.

@Christopher Mooney

In your situation as a W-2 earner, you might want to explore the short-term rental (STR) tax strategy with cost segregation, it's one of the few ways real estate can help offset active income if structured right. The key is meeting material participation requirements, like spending over 100 hours and more than anyone else on the activity, or exceeding 500 hours in total. Definitely worth discussing with your CPA to make sure you qualify and implement it correctly.

Hi @Michelle Gillespie

You can search for real estate CPAs using Biggerpockets search and team building tool here https://www.biggerpockets.com/business/finder/tax-and-financ...

I don't think this will be discussed anywhere in the tax code, but from what I know from reading court cases and hearing other people talking about it, is that it will be very hard to convince the IRS of meeting the requirements for either REPS or STR loophole remotely and having a PM in place. I personally vote against it, but I could be wrong.

Good question, this trips up a lot of STR owners. Generally, time spent at the property before it's listed for rent can count as personal use, especially if you're furnishing, decorating, or getting it "guest-ready." The IRS only makes an exception for days primarily spent on repairs or maintenance (like fixing a broken sink or painting). So if you're staying there while doing mostly setup or improvements, those days might still be considered personal.

After it’s listed, doing some upgrades while the place is still available to rent usually isn’t a big deal, but if the place is offline for major work, those days might not count as rental days either. It’s a gray area, so keep solid records and definitely check with your CPA to make sure you're handling it right.

One thing I’ve learned from working with real estate investors is: if you’re not consistently tracking the right metrics for your current portfolio or when researching new deals, it’s hard to know how properties are really performing.

Below are the key financial metrics I believe every investor should understand.

- Net Operating Income (NOI)
This shows how much income a property is generating after paying for operating expenses (things like maintenance, insurance, and property management). It doesn’t include debt payments or taxes.
A higher NOI usually means the property is performing well operationally.

- Debt Service Coverage Ratio (DSCR)
DSCR tells you whether your property's income is enough to cover your loan payments.
A ratio above 1.25 is generally considered solid. Below 1.0 means the property isn’t generating enough to pay the mortgage, which is a problem for both you and your lender.

- Occupancy Rate
This one’s straightforward; it’s the percentage of units currently rented (this is more important to track in multi-family and commercial properties)
A high occupancy rate is what you want. If you’re consistently seeing vacancies, it’s worth digging into pricing, location, or tenant experience.

- Cash Flow Projections
Looking ahead is just as important as looking back. Cash flow projections help you plan for upcoming expenses, anticipate shortfalls, and know when you’ll have money available to reinvest.
You don’t want surprises here like major capex, repairs, vacancies, etc.

- Capitalization Rate (Cap Rate)
Cap rate helps you assess how much income a property generates relative to its value. It’s a useful way to compare properties, especially in different markets.
A higher cap rate may mean a better return, but also potentially more risk. Lower cap rates tend to show up in stronger, more stable markets.

- Internal Rate of Return (IRR)
IRR measures the overall return on an investment over time, including cash flow and appreciation.
It’s helpful when comparing deals with different timelines or structures. Higher IRR is better, but context matters: timing, risk, and assumptions all play a role.

- Cash on Cash Return
This tells you how much return you’re earning on the actual cash (down payment) you put into a deal.
It’s especially useful if you’re using financing. The higher the return, the more efficient your investment, but again, it depends on risk and strategy.

- Gross Rent Multiplier (GRM)
GRM is a quick way to compare a property's price to its rental income. It doesn't account for expenses, so it's just a starting point.
In general, lower GRM means better value, but always dig deeper before relying on it.

These metrics don’t tell you everything, but together they give you a solid view of how your portfolio is doing and where you might need to make changes.

If you’re already tracking some of these, great. If not, I’d start small, pick a couple, and build from there.

Please let me know which metrics you focus on or if there’s one you’ve found especially useful in your own investing.

Correct. The IRS prohibits "double dipping" in the context of taxes.

"Double dipping" refers to the practice of receiving a tax benefit for an expense or item that has already received a tax benefit or was paid for with pre-tax dollars. Essentially, you cannot get two tax advantages for the same expense.