All Forum Posts by: Prag Patel

For those that are interested in seeing a "ballpark" range of what a cost segregation tax credit would look like, feel free to PM me and I send a link to my firm's online tool that can help with this.

Hey Jason, it would be helpful to think of cost segregation as a vehicle to obtain tax credits on your income. Therefore, as long as you have the income (or had it in the past 5 years as a Qualified REP) and the property you performed the studies in, you can deduct it for as long as you own it.

You also need to personally factor in the "lost opportunity" if you stay active in your RE activities and determine whether it's worthwhile simply to get tax credits. I am not an advocate of changing your lifestyle or desires to simply get a tax credit. If you want to discuss it more, I'd be glad to share my experiences with you on this. We can also perform CS studies for you and work with any CPA or accountant you currently have.

Hey @Jordan Copeland, I actually went the extreme route and learned accounting, tax, and bookkeeping on my own. If I had to do it all over again, I would not use Quickbooks Desktop for 1-4 properties. You can without question alter it so that it can work for simply owning and managing properties, but the vast majority of the tools and structures built-in are for a business that operates on revenues and vendor/labor costs, and not necessarily gross rents and property expenses. I know of a few that have some more customization built-in such as Xero (and a plethora of property management programs), but it really depends on how far you think you will go in this business, and how "hands on" you want to be in the accounting portion of it. If you plan to stay small scale, you can do a simple spreadsheet and give that to your accountant. If you plan to go big scale, then you will eventually outsource your bookkeeping and accounting to someone so you can focus on more deals.

If you or @Eva Croasdale are interested in a DIY route, Keith Gormezano (a.k.a. Dr. Quickbooks) helped me structure the program to my rental properties. He made housecalls pre-Covid, but I'm sure he can you virtually. Sorry for the late response Eva!

Ditto what Ashish said. There are ways of reducing it a little, like annual gifting to your children (and then buying RE?), setting up an FLP, or turning it into a charity, but most of that would require planning well ahead of the sale (or concurrence from the buyer). A Tax Lawyer would be best to help your friend out to determine whether it's too late to set up any of these vehicles.

Hey Peter, might be late to this party, but yes, a cost segregation study is a tax credit in which you can apply retroactively up to 5 years (CARES ACT). This is still in place, and can be done right now. I am not aware of any "bonus" depreciation that was made available from this ACT that wasn't already in place per the IRS guidelines outside the QIP bonus depreciation which was part of the Tax Cuts and Jobs Act. I can't speak to what Biden may or may not do in the future.

Regarding cost of a cost segregation, you could theoretically categorize it as "legal services but that should be discussed with your personal accountant/CPA to determine the appropriateness of this. If you want to discuss this further, feel free to schedule a call with my team and I on this!

Ditto on the property tax. Just got an almost $8k bill for a 4plex. Basically ate most of my cash flow for the year. Has any non-resident ever successfully challenged the tax assessment on their Richland county tax bill?

Hey Alex, I was actually researching Personal Care Homes and I saw your post on here. I went to the website, but it appears to only offer information on the term loan. Do I have to use your comnpany's loan? Who will be administering the Personal Care Home?

Thanks,

-prag