All Forum Posts by: Natalie Kolodij

OH also- 

There was just a post in a tax group where mutliple people were running into issues with clients because: 

They'd been reporting properties on a 1065 partnership that LEGALLY they owned. Title in personal names. 

So now you go to sell an asset but oh...what you've told the IRS owns it for years, isn't what legally owns it. 

Just talk to an attorney, get good insurance in place, good contracts to protect you. 

You do not want a rental in a corp, ever for tax purposes. 

If you "operate" it through your corp you're essentially operating a property management company and it's going to make that income subject to self employment taxes. You're creating HIGHER taxes. 

I'm not an attorney- but most lawsuites most commonly relate to the physical property....someone falls, gets hurt, tree falls, ect. 

The Legal owner of the property will be held liable, not whoever is on the contract. 

The Costs in 2021 won't be able to be deducted in 2021. 

It's all capitalized, even if able to be expensed by bonus depreciation. 

As mentioned above only some of the renovation will qualify for bonus depreiation, but costs will carry into the year the property in placed in service/ available for rent. You don't have a reportable rental yet to expense it against.

A good tax professional can run a projection for you that will give you exact numbers. 

They're late now. 

I recommned using efileforbiz.com (or there are others but this website is easy to navigate)

It's a couple dollars a form. 

1099 everyone you paid > $600 to related ot your rentals/real estate business

Do not issue to Any one who's structuerd as a corp 

Do not issue 1099-interests to banks - they issue you a 1098 instead 

A property management company pays 15.3% self employment tax on income. 

A rental pays no self employment tax. 

If your rental earned $5,000 net income = You pay income tax on $5,000

If you now pay yourself/your management company $5,000 = Your rentals pay no income tax. Your property mnaagemetn pays income tax on $5,000 + 15.3% SE tax on $5,000. 

You need to own and occupy it for 2 of the last 5 years to sell tax free (Up to $250k gain if single/ $500k if married) 

It doens't need to be consecutive- you could occupy year 1 and year 3 and rent it for the year in between as well.

If you have a bookkeeper and just use a dedicated account they handle it all. 

Stessa though is my reccomndation. 

And use a dedicated account.

You can't deduct any expenses in excess of income. 

It's not a business motive to the IRS. 

https://www.irs.gov/publicatio...

What is a day of personal use?

A day of personal use of a dwelling unit is any day that the unit is used by any of the following persons.

1. You or any other person who owns an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement (defined later). However, see , later.
2. A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Family includes only your spouse, brothers and sisters, half brothers and half sisters, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
3. Anyone under an arrangement that lets you use some other dwelling unit.
4. Anyone at less than a fair rental price.

Not necessarily. 

You're going to need to check off that you issued 1099s to any one you paid over $600 to. As long as he fills outa w9 and knows he's getting a 1099.