All Forum Posts by: Sean O'Keefe

Quote from @Hunter Gibson:

I was trying to run numbers for an investment property out of state. I was wondering if you pay more in property taxes if you are not living in the home or if that state is not your primary residence?

Thanks for the help  

Yes, in some States you pay less in property taxes if the person owns and occupies their home as a primary residence as of January 1st of the tax year. This is called a homestead exemption.

Also, don't forget to check the State tax filing requirements and guidelines for out-of-state investors with rental income.  

Pauline Choi any Real Estate CPA who's qualified to work in State STR is located in and California will work (provided they have solid experience). Personally, I don't think the location of the CPA matters.

Biggerpockets has a tax professional directory if you don't get an influx of referrals to your love. August isn't a great month to be looking for a CPA as Michael Plaks pointed out.

Quote from @Ryan Thomson:

For a pure rental property you can depreciate the the purchase price of the house minus the value of the land divided by 27.5. For a house hack, you can then depreciate that number by the percentage of square feet that your home is used as purely a rental. For a duplex it would be 50%.

Examples. 450k purchase price. Land is 50k. you have a duplex and live in one side by yourself and rent the other.

450k-50k =400k

400k/27.5 = 14,545

14,545/2 = 7,272.

You can deduct $7,272 from your RENTAL INCOME each year. Or in other words the first $7,272 you make is tax free. You of course have to make that much in rental income to deduct that much. I think it carries forward if you don't use it all though. You really need to talk to an accountant if this is something you want to do. They are worth every penny!

Yes, prorating the expenses is critical for a duplex house hack. Also, you need to make sure that you meet the IRS definition (avg. 7 days, not more than 30 days, personal days 14 days) of a short-term rental or you could lose the ability to offset W-2 income. 

Quote from @Jeff Davis:

Quote from @Michael Plaks:

@Jeff Davis

You can find quite a few of us right here on this forum, simply by browsing.

Just keep in mind that August is a bad time to look for a CPA. Read this:

https://www.biggerpockets.com/forums/51/topics/1057644-augus...

Thanks, Michael! This is helpful. Looks like November is a better timeframe to consider moving to a new CPA. 

 Yes, November is probably a better time. The sweet spot -> after 9/15 & 10/15 filing deadlines, but before Jan - Apr busy season. 

Depreciate the roof in line with how long the roof is expected to last (e.g. useful life). The IRS has benchmarks/requirements for this and generally, the useful life of the roof is not 20 years or less so it isn't eligible for bonus depreciation in 2023 (80%). 

Yes, BUT these are generally already included in the acquisition value of investment property. Cost seg firms look at the value of investment property less land  (etc.) as a starting point to evaluate what useful life should be across investment property and segregate it accordingly. 

Quote from @Benjamin Giles:

I have a condo I bought with cash. Due to low ARV and current high interest rates a refi doesn't make sense due to fees etc.

New condo association rules prohibit selling to an investor. Owner occupied only. 

Property cash flows $500 month.

Is there a benefit to transferring the property to my LLC? My LLC is currently about 1.5 years old and has no income or expenses. I am not well versed in tax liability/benefits etc., or benefits if my LLC having assets.

I would like to explore the possibility of DSCR loan on a property with my LLC, so would having that asset under my LLC have a benefit over me owning personally with a potential loan to my LLC?

Transferring the property into LLC is for limiting your personal liability (like insurance), not for tax optimization.

Not having a loan on the property will make the process of transferring the property into you LLC easier. 

Here’s great thread on how to do this and things to watch out for
https://www.biggerpockets.com/forums/311/topics/328968-quit-...

This question was already answered recently by Michael here 

https://www.biggerpockets.com/forums/51/topics/1136752-expla...

DIY Cost Seg or KBKG ($500 - $1,000)

Engineering firm ($2,000 - $6,000)

Michaels post explains difference btwn DIY vs Engineering firm. 

Should you do one? That depends on your situation, what you want to get out of it, property type, how much you participate, if you plan ti sell soon and the nature of sale (e.g 1031), etc.

Lindy Peterson whether your STRs are in Grand Lake, CO, or Houston you can find knowledgeable Real Estate CPAs that understand tax treatment of STRs here in BPs Tax Professional Directory: https://www.biggerpockets.com/blog/tax-partners

Cody Shepherd First, for your wife to qualify for Real Estate Professional Status (REPS) she would need to meet the IRS requirements to be considered one.

Next, you might find this post from John Malone on Common Questions on STR and REPS helpful (great post John).

Based on what you say, it's unlikely, but the details are important and what you've provided isn't enough. I'd suggest chatting with a tax professional for more clarify and they can help you nail down the facts