All Forum Posts by: Nicholas Aiola

@Jose Contreras Unless either one of you is a REP (it sounds like neither of you are due to your full-time jobs), your rental RE losses will be suspended and carried forward because your income > $150k.

It's not calculated based on the profit, and it's not that simple. There are just too many variables, and it is too convoluted to speculate without the full set of details to review. You should consult with your CPA and a Qualified Intermediary to nail down these details before pulling the trigger.

@Peter Morgan Most states have pushed the filing deadline back at the time of this writing, but the modified due dates vary from state to state. You'll have to verify with each state.

@Lynn Gadd You can do a partial 1031 exchange - any "boot" you take out of the exchange will be taxable and the eligible portion exchanged will be tax-deferred.

@Michael Plante It is not easy to qualify as a REP, that is true. There are several laws, rules, guidelines, suggestions, etc. to successfully utilizing REP status - far too many to list here, but one note I'd like to point out from your post is that you focused on a flip business and deductible expenses related to that business. Yes, you may deduct all legitimate business expenses against flip income without needing to qualify as a REP. Furthermore, qualifying as a REP won't help you if your only real estate investments are flips.

@Brendan August Ultimately, it is up to you, but here goes my personal opinion - if you have the DBA, EIN, Partnership Agreement, and overall plan to be a General Partnership, you should follow through with that and use the name of the partnership on the W-9. The tax and bookkeeping hurdles should not deter you from your desired entity structure. In the same breath, if the tax and bookkeeping responsibilities are more than you can/know how to handle, do not attempt to do them yourself - hire them out. Partnership taxation especially is not a DIY task. Bookkeeping can be, but most of the time is better off outsourced, too (we clean up messy books from DIYers all the time).

@John Grimsley No, you do not need to send the IRS a notice. However, your IRA may have a Form 990-T filing requirement (for example, if the property is leveraged), and that would be filed with the IRS on behalf of the IRA.

@Nina Ning No to travel - those costs would be included in the basis of the rental that was placed in service in 2021.

Expenses after the in-service date are deductible. You will have to analyze whether repair costs are deductible as an operating expense or capitalized as an improvement. Reno costs before the in-service date would be added to the property's basis and depreciated.

@ThomasRoy Penland Although more difficult, it is possible to qualify as a real estate professional while using a property manager. Obtaining a real estate license in and of itself will not qualify you as a REP; you would have to practice as a real estate agent and still meet the REP criteria. Being a real estate agent is not the only way to qualify as a REP.

Discussing the qualifications, dos and don'ts, and best practices for the REP designation is a very involved and individually specific conversation. It is advisable to retain a real-estate-savvy tax professional to navigate the REP waters as it is a highly auditable area of the Tax Code.

@Ana Marie B. Thanks for asking! We do specialize in real estate. That said, real estate investors are often involved in other industries/investments in addition to REI.

We have several clients with stock options, crypto investments (taking an educated guess based on your profile pic), and we do integrate and strategize with other professionals on our clients' teams.