All Forum Posts by: Sean O'Keefe

Based on what you say - yes

Keep in mind that you need to prorate the deduction of the land value before depreciation/cost seg since the ADU is on the property.
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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

@Justin Chan I'm not sure location matters in the case of cost seg, but they should be familiar with Rhode Island State tax laws, and Real Estate

If you don;t get any recommendations for RI-based CPA and you are open to working with CPA remotely, you might check out Biggerpockets Tax Directory of Real Estate CPAs accepting new clients.

Keep in mind, with the 10/15 filing deadline around the corner, you are searching at a busy time of the year. 

@Rereloluwa Fatunmbi Based on what you say, unlikely, but you can find more info on REPS from IRS here.
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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

@Dave Craig "Do the business expenses (plus your personal itemized deductions) have to exceed the standard deduction for a personal tax return to even matter" 

No, that's not how it works.

The income/expenses from your LLC are reported on IRS Schedule K-1 that flows through to your personal tax return. This isn't included in values to determine if you are taking the standard deduction or not.

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Evaluate the depreciation of each item separately. If the building (original purchase) is fully depreciated the improvements and repairs you make to it in year 28 still need to be evaluated to determine if you need to depreciate it or not. 

More here from the IRS on how depreciation works . 

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Nathaniel C. good point, type of property (STR or LTR), REI income, and REPS or not are also factors to consider when evaluating whether or not to do cost seg.

Google sheet with 3 or more columns:

• Description of task
• Time spent (in hours)
• Date of task

You could consider splitting the sheet between recurring (day-to-day, like finding tenants for Airbnb) and non-recurring (repairs, renovation) to simplify this.

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Nathaniel C. to do a cost seg. or not depends on a few factors including:

• What you are hoping to get out of it (e.g. offset other income in the portfolio, get a big refund to put down on another property)
• How long do you plan to hold the property (depreciation recapture of 25% might make this less worthwhile if you sell the property in 2 years)
• Did you already place the property in service and start depreciating it for 27.5 years (LTR) or 39 years (STR). In this case, it's messy to fix this and you have to file a Form 3115.
• You would consider a 1031 exchange to avoid depreciation recapture.

There are more factors to consider depending on the investor. Would model this out or prepare tax returns with and without the impact of cost seg to help in the decision-making process. 

*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Kushal Shah BP has a Tax Professional Directory as another resource to find Real Estate CPA that can help. Although, right now with 9/15 and 10/15 deadlines a lot of CPAs are fairly busy. If this is for 2023 you'll have better luck finding a great CPA in November.

If you are set on CA Attorney I see Katie Balatbat comment here frequently.

Why do you feel like you need an attorney? Do you think a Real Estate CPA can't handle helping you manage your taxes, cost segregation, etc for your small multi-family?