All Forum Posts by: Yonah Weiss

@Joseph DiNardi-Mack 

You might consider passively investing with another established HML, or an online platform. This will save you a lot of time, cost, and energy. From experience working as an originator and underwriter for a HML, being a lender takes up a good deal of time. If your other business is taking up too much of your time to do flips, I would imagine, running your own HML business, may not lend to your schedule.

Best of luck with all!

I work with a number of accountants in the NYC area. You should reach try reaching out to May Chen, CPA, or Josh Levine. You can PM me for their contact info. Best of luck.

Excellent point. And well taken. I definitely appreciate it. I guess I was addressing my question to you, which is insensitive to the forum.

I misunderstood your post, because 'building' is usually thought of as the building and all of its components; whereas 1245 property (which is the revenue code section) applies to many components of the building itself, which many people do not consider 'equipment' (i.e. electrical components, carpeting, wall coverings, shelves, decorative molding, etc.) and nevertheless can be accelerated for their tax-saving benefit.

@Linda Weygant why do you say that 'Rental buildings have only one choice - straight line'? Isn't there a difference between 1245 and 1250 property which can or cannot be accelerated? I believe every rental building is composed of both components.

@Dave S.

Accelerating depreciation can be an amazing way to increase your cash-flow by claiming higher deductions on those assets in the first few years of owning a property. 
However, a couple of important points, to know if it's right for your situation. 

First of all, your property must have enough value for cost seg to make sense. Typically between 10-30% of the value of the property can be re-allocated and accelerate depreciation. So let's say you own a property worth $1,000,000. Lets allocate 15% to land, which doesn't depreciate. we're left with $850,000 depreciable basis. Lets say we can identify 20% of it is 5-year property. 850K*.20%=$170,000. This will be spread over five years. This will give you an extra $34,000 of depreciation over the first five years. (*this was a very over-simplified calculation, and should not be relied upon for tax filing purposes, without first consulting with a tax professional)

Your profile says 'wholesaler'. Generally speaking, unless you hold a property for at least 3-4 years, cost seg doesn't pay so much, since there will be depreciation recapture tax (albeit less). This may depend on your investment strategy. Many people would not mind getting an interest-free loan for a few years to reinvest with.

Not all depreciation is recaptured at the same rate, therefore you will likely still save money later on.

Like @Michael Plaks mentioned, hiring professionals (i.e. an engineer, as the IRS recommends) is an additional expense, so you have to see if the amount you are spending is gaining you the NPV of the money being saved on taxes. Most professionals will be able to give you an upfront estimate at no cost, to run the numbers yourself.

You mentioned improvements. It's possible to accelerate the depreciation on assets which you intend to dispose of (if they fall under the 5 or 15 year asset category), then, write-off the usable value of those assets, and when you replace those assets, you can go ahead and re-accelerate their depreciation. 

On top of that, you can claim bonus depreciation, which is an added 50% of the value of any new construction or renovations.

Many assets, that fall under the 5-year 'personal property' also falls under section 179 which allows you, to write off up to $500,000 of these assets in the first year of purchase. This amount might be significantly changing with the new Trump tax plan. A cost segregation expert can help identify these assets to get you the maximum tax savings.

@Daniel Hyman CPA, and his firm My Online Accountant, LLC 
 Highly recommended.

@Timothy Brubaker please send me some more info [email protected]

Thanks!

BP offers so much to so many people. I wanted to take this opportunity to hear what all of you appreciate most about this amazing platform. A couple thoughts of mine.

1) opportunity to get advice from experts in any and every area related to REI all in one place.

2) I am grateful that I was able to reconnect to an old friend, who I found 'coincidentally' on BP

I am originally from LA, and I can highly recommend Inna Khayut, CPA at KATZ, KHAYUT & STROLL, LLP

As well as Alan Tsarovsky, CPA, President of www.taxadvisorygroup.com/

Both are knowledgeable about real estate, and very good people. If you end up speaking to them, send my regards. Best of luck!

A Construction or Improvement Exchange allows an investor to use a portion of the proceeds from the sale of the Relinquished Property to improve or build on a newly-purchased Replacement Property. This approach works well if the Replacement Property is less valuable than the property being relinquished. When a Construction Exchange is structured properly, the improvement costs can be used to equalize the Exchange. During the §1031 Exchange, the Qualified Intermediary (QI) holds title to the property while the construction improvements are being done. All improvements must be completed within 180 days of the sale of the Relinquished Property.