All Forum Posts by: Nicholas Aiola

@Mike M. There are a number of tax professionals on the forums who are well-versed in the recent tax laws and specialize in working with real estate investors. I believe most offer a free intro meeting (we do). I would recommend reaching out to a few to see if there's a good fit.

@John Cho Invest in passive activities that produce net income or sell a passive investment that results in a capital gain. Those are your only two options to offset passive losses in the scenario you described.

@Thomas Sulz You will have to check with your plan administrator to make sure you can do a rollover while still employed. If you can, the rollover to an IRA and withdrawal from an IRA would be two separate transactions.

You have 60 days to complete the rollover and rollovers are not limited in amount by the annual IRA contribution limit. If you plan to withdraw contributions from your Roth IRA, the account must have been open for at least 5 years to make the withdrawal tax- and penalty-free.

Other options include taking a loan out from your 401k and withdrawing up to $100k tax- and penalty-free if it's a coronavirus-related distribution (CARES Act).

Thanks @Daniel Hyman !

@Drew Daveluy Happy to help out however I can.

@Charles Worth In your example, the taxpayer would be considered a part-year NYC resident and will pay city taxes for income earned during the portion of the year they lived there.

@Account Closed Are you referring to reporting the assignment fee on Schedule C? It would be reported as Gross Receipts on Line 1 of Schedule C. No additional description is necessary but if the software is prompting you for one, you can call it Assignment Fees.

@Colin M. In addition to a CPA, you should loop in an attorney when discussing entity structuring to ensure all bases are covered.

From a tax standpoint, LLCs don't have an effect - positive or negative - on your tax liability. An LLC is the most common entity for long-term rentals, so the tax planning strategies should be less focused on entity structuring and more focused on making sure you are receiving (and are able to use) the tax benefits of rental real estate.

@Ivy A. @Robert Feldman @Rob Horon

If you are not currently in business, the inspection and appraisal cost of a failed deal would sit on your books until you begin business (acquire and place a rental in service), at which point it will be added to the property's basis.

If you are currently in business, you will get differences of opinions from different tax professionals on how to handle these costs. I would recommend speaking with your CPA for specific advice.

@Nicole Sun If you are in the business of lending, it is earned income subject to self-employment tax. Otherwise, it is portfolio (interest) income.

@Will Dixon You bet!

1. The share of interest would not be deductible on Schedule E in this example; it would be deductible on Schedule A as investment interest. In any event, assuminf you receive your liquidating distribution and do not use those funds to pay off your loan (resulting in continued interest expense), if you do not use those funds to purchase another investment or use it for business, the interest will no longer be deductible. The interest deduction follows the money.

2. If the funds are continually used for investment (sale of stock after sale after sale), I would continue to deduct it as investment interest on Schedule A.

Based on your two examples, it sounds like all interest would fall on Schedule A.