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Real Estate Investors, Stock Traders, and Business Owners guide to preserve their wealth, protect their assets, and prosper in the future.
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3 days ago
3 days ago
In this episode of Tax Tuesday, Eliot Thomas, Esq. is joined by Anderson CPA Barley Bowler. They explain how transfer-on-death titles still provide beneficiaries with stepped-up basis advantages and clarify that short-term rentals don't qualify for real estate professional status. You’ll hear proper entity structures for rental properties, recommending against holding appreciating real estate in C corporations. They thoroughly explain the 280A "Augusta Rule" that allows tax-free rental income from personal residences to your business for up to 14 days annually. With input from bookkeeping expert Troy Butler, they recommend QuickBooks Online for tracking rental property finances. Additionally, they cover Roth IRA conversions, tax withholding strategies, and 1031 exchange rules for deferring capital gains.
Submit your tax question to taxtuesday@andersonadvisors.com
Highlights/Topics:
- "When a house is under a transfer on death title, does the beneficiary still get a step-up in basis?" - Yes, they still get a stepped-up basis.
- "If I already qualify as a real estate professional rep status via short-term rentals and add long-term rentals to the mix. Can I lump the two kinds together? And does having an S corporation that manages everything affect my rep status?" - Short-term rentals don't qualify for REP status. S-corps generally don't affect REP status.
- "Where real estate properties are in individual LLCs, disregarded and owned by my C corporation, does the C corporation maintain one bank account and collect rent for all individual properties?" - Not recommended. Use a management company instead.
- "If you get started in wholesaling, should you file as an S corporation?" - Yes, use S or C corp.
- "What kind of bookkeeping is needed for rental real estate? Do you have any bookkeeping software to suggest?" - QuickBooks Online is recommended. Track properties separately.
- "When doing an IRA to Roth conversion, are there any limits? Are pre-tax conversions always treated as ordinary income? Is it true that the IRS does not know or care when the conversions were done during the year?" - No limits. Yes, ordinary income. IRS treats as earned throughout year.
- "How does tax work if a business owner is paying himself as an employee, do we have to tax twice? Once for the business income and once as an employee?" - No, payroll is deductible business expense.
- "How do I do a 1031 exchange? And how do I maximize real estate property depreciation after I do a 1031 exchange? Am I stuck with the previous depreciation rate and amount of the previous property?" - Use a qualified intermediary. Trade up for more depreciation.
Resources:
Schedule Your Free Consultation
https://andersonadvisors.com/strategy-session/?utm_source=can-you-boost-depreciation-after-a-1031-exchange&utm_medium=podcast
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=can-you-boost-depreciation-after-a-1031-exchange&utm_medium=podcast
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Thursday May 01, 2025
Thursday May 01, 2025
Clint Coons, Esq., interviews Kathy Fettke, founder of Real Wealth Network and a seasoned real estate expert with over 20 years of experience. They discuss current market conditions, with Kathy explaining how real estate's slow-moving nature provides stability compared to the volatile stock market. She shares that recent decreases in mortgage rates have already increased pending sales and mortgage applications. Kathy reveals her top investment markets, emphasizing the Southeast (particularly Texas and Florida) for growth and appreciation, while the Midwest (parts of Ohio and Indianapolis) offers better cash flow. She explains the importance of property type selection, market dynamics, and long-term strategy, highlighting how newer properties in growth markets typically outperform older properties in stagnant markets, even if the latter initially show better cash flow. Kathy also discusses the current opportunity with builders offering rate buy-downs on new construction, property management considerations, and the importance of avoiding markets with unfavorable landlord laws. This episode provides valuable insights for both new and experienced real estate investors looking to build wealth through strategic property acquisition.
Kathy Fettke is Co-Founder of RealWealth.com, helping busy professionals acquire turnkey rental properties in fast-growing U.S. markets. She also leads RealWealthDevelopments.com, offering passive build-to-rent syndication opportunities. Kathy hosts The Real Wealth Show and Real Estate News for Investors podcasts, and co-hosts BiggerPockets: On the Market. She authored the bestsellers Retire Rich with Rentals and Scaling Smart with her husband, Rich Fettke. A frequent speaker and media guest, Kathy has appeared on CNN, CNBC, Fox News, NPR, and CBS MarketWatch.
Highlights/Topics:
- Current real estate market conditions and mortgage rate sensitivity
- Top investment markets: Southeast for growth vs. Midwest for cash flow
- Importance of property condition in investment returns (newer vs. older properties)
- The danger of focusing solely on cash flow without considering long-term appreciation
- Current opportunity with builders offering interest rate buy-downs
- Millennial demographic demand driving rental housing needs
- The importance of proper property management selection
- Avoiding markets with unfavorable landlord-tenant laws
- Long-term vs. short-term real estate investment strategies
- Closing comments, final words of advice
Resources:
https://realwealth.com/real-estate-syndications/
https://www.instagram.com/realwealth/
https://www.instagram.com/kathyfettke/
Schedule Your FREE Consultation
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Tax and Asset Protection Events
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https://andersonadvisors.com/
https://andersonadvisors.com/podcast/
https://www.youtube.com/channel/UC5GX-U6VbvMkhSM1ONBiW8w
Tuesday Apr 29, 2025
Tuesday Apr 29, 2025
In this episode, Anderson attorneys Amanda Wynalda, Esq., and Eliot Thomas, Esq., address several listener questions on a variety of tax topics. They cover the tax implications of selling stocks to purchase rental properties, explaining capital gains strategies and depreciation options. The duo discusses using LLCs and management corporations for rental properties, including how property management fees can generate tax-free income. They explore inheritance tax considerations for 401(k)s, the benefits of short-term rentals for generating tax losses, and the implications of moving back into a rental property. Other topics include setting reasonable salaries for S-Corporation owners, maximizing depreciation to offset W2 income, claiming natural disaster losses, depreciating remodel costs for rental properties, and properly implementing the 280A/Augusta Rule for tax-free home rentals.
Submit your tax question to taxtuesday@andersonadvisors.com
Highlights/Topics:
- "I would like to sell my stocks and use the money to help purchase a rental property. Is there a strategy to minimize or avoid paying taxes on capital gains or any other tax-saving advice?" - Loss harvesting and short-term rental tax benefits.
- "Would a rental property not in an LLC also be reported under the Management Corporation or a 1040?" - Report rental on 1040, management fee on 1120.
- "What would the tax implication be when a spouse passes and the surviving spouse inherits a 401k?" - Lump sum, continue distributions, or rollover options.
- "What would be the tax consequences concerning W2 income, depreciation, etc., of purchasing a rental property, using it as a short-term rental with material participation in the tax year that it was purchased, then selling it the following tax year?" - First-year losses, later depreciation recapture on sale.
- "What are the tax implications if I've moved back into my rental and use it as my primary residence? I'm not planning on selling anytime soon." - Reduced Section 121 exclusion, depreciation recapture later.
- "What is a reasonable salary range we should set for ourselves to remain compliant but still maximize our S Corporation Tax savings?" - 30-60% of net business income typically.
- "If a person is a W2 wage earner and wants to start real estate as a side job, what needs to be true when picking real estate options to maximize asset depreciation to help offset my W2 taxes owed?" - Short-term rentals with material participation (100+ hours).
- "If I experienced a loss from a flood that was declared a natural disaster in 2024, how do I take that credit on my taxes?" - Personal: federal declaration required. Business: none needed.
- "How do you depreciate remodel costs for an income property? So, a rental property. You purchased the property, for example, 10 years ago for 100k, and began depreciating it. This year, you put 30K into a remodel that included floors, paint, kitchen cabinets, and appliances." - Separate depreciation schedules for each improvement type.
- "I'm interested in using the 280A/Augusta rule rental of my home for an upcoming seminar that I'll be attending online. Am I allowed to use this strategy since I'm the only one attending? Also, I reviewed the document that Anderson put together for the 280A. It mentions getting three quotes. If I call a hotel and ask for a conference room quote for one person, I imagine I won't be taken seriously. Do you just request a small conference room for five people or less?" - One-person meetings allowed; request quotes for small groups.
Resources:
Schedule Your Free Consultation
https://andersonadvisors.com/strategy-session/?utm_source=how-to-sell-stocks-tax-efficiently-to-buy-rental-property&utm_medium=podcast
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=how-to-sell-stocks-tax-efficiently-to-buy-rental-property&utm_medium=podcast
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Thursday Apr 17, 2025
Thursday Apr 17, 2025
In this episode, Toby Mathis, Esq., of Anderson Business Advisors, welcomes David Pelligrinelli, a professional asset recovery expert from ActiveIntel. They dive deep into the alarming reality of employee theft and embezzlement in businesses of all sizes. David explains the "fraud triangle" concept—opportunity, pressure, and justification—that enables employee theft, sharing real-world examples of trusted employees who stole hundreds of thousands of dollars from their employers. They discuss essential prevention strategies like having owners open all financial mail, requiring employees to take vacations so others can review their work, and implementing proper checks and balances. The conversation reveals sophisticated theft techniques, including ghost vendor schemes and credit card fraud, while emphasizing that even trusted employees can succumb to temptation when proper controls aren't in place. David also shares fascinating stories about asset recovery investigations and explains how counter-investigation tactics can help those being investigated unfairly.
Highlights/Topics:
- Introduction to employee theft and embezzlement as a common business problem
- The "fraud triangle" concept: opportunity, pressure, and justification
- Best practices for preventing employee theft (opening mail, mandatory vacations)
- Ghost vendor schemes and sophisticated theft techniques
- Long-term financial impact of embezzlement on business profitability
- Examples of elaborate asset concealment by debtors
- Employee dishonesty insurance coverage options
- Counter-investigation tactics and illegal investigation methods
-
Share this with business owners you know
Resources:
Email: dave@activeintel.com
Schedule Your FREE Consultation
Tuesday Apr 15, 2025
Tuesday Apr 15, 2025
Tax season is in full swing, and in this Tax Tuesday episode, Anderson Advisors attorneys Amanda Wynalda, Esq., and Eliot Thomas, Esq., tackle numerous listener tax questions with practical advice. They discuss the Section 121 exclusion for primary residences, explaining how married couples filing separately can each qualify for the $250,000 capital gains exclusion. They outline strategies for converting personal residences to rental properties using S-corporations and installment sales to maximize tax benefits. Amanda and Eliot clarify 401(k) withdrawal rules, explaining when penalties apply and options like the Rule of 55 and hardship withdrawals. You’ll hear recommendations on optimal entity structures for real estate syndications, explanations of the short-term rental "loophole" for active income classification, and when to use trading partnerships versus simple LLCs for investment accounts. The episode concludes with a breakdown of key Tax Cuts and Jobs Act provisions set to expire in 2025, including individual tax brackets, standard deduction changes, child tax credits, and bonus depreciation, highlighting potential impacts for taxpayers.
Submit your tax question to taxtuesday@andersonadvisors.com
Highlights/Topics:
- "I understand that you can sell your primary residence and receive an exclusion from capital gains taxes on the first $250,000 if you're single and $500,000 if you're married filing jointly. However, I can't find any rules regarding if you're married filing separately. Could you please confirm if married filing separate also qualifies for the exclusion? Also, could you talk about how making improvements adds to the basis?" - Yes, both spouses filing separately can each get the $250,000 exclusion. Only one spouse needs to be on the title, but both must use it as a primary residence for 2 of the last 5 years. Improvements (new floors, additions, HVAC systems) add to your basis, which reduces taxable gain when you sell.
- "Can I use both cost segregation and bonus depreciation from an S-corp you sell your personal residence to for the Section 121 exemption? Also, what is the accounting treatment if you sold your personal residence to an S-corp using an installment sale?" - Yes to cost seg, no to bonus depreciation (not allowed for related-party transactions). For accounting, record the property as an asset on the S-corp with a liability for the note owed to you personally. You'll recognize all gain in year of sale (which is actually beneficial to utilize the Section 121 exclusion), and interest payments will be recorded as interest income.
- "Do I have to officially quit my job and be retired to take disbursements from my 401k? At what age can I take disbursements from my 401k? Are there any negative tax implications from taking early disbursements?" - You don't need to quit your job to take distributions if you're 59½ or older, though your specific plan may have different rules. Early withdrawals before 59½ incur a 10% penalty plus ordinary income tax, unless you qualify for exceptions like the Rule of 55 (if you leave your job at 55+) or hardship withdrawals for specific situations.
- "What is the best entity for tax purposes to invest in real estate syndications?" - A Wyoming LLC (disregarded) or partnership is typically best. This gives liability protection while letting income/losses flow directly to your personal return (important for using passive losses). Avoid S-Corps (reasonable wage requirements) and C-Corps (trap gains/losses on corporate return).
- "Regarding bonus depreciation and the short-term rental loophole, are either the 500 hours or 100 hours and, more than anyone else, material participation tests prorated for the year? For example, if a property is purchased and put into service in November, those hours would be difficult to achieve." - No, these hours are not prorated. You must meet the full hour requirements between purchase and December 31st. Consider using the "substantially all participation" test if you personally perform nearly all work needed, even if under 100 hours.
- "If I purchased an investment apartment and repaired windows, floors and incurred other miscellaneous expenses to make it ready for renters, can I write the expense off on my Schedule E? I didn't receive any income for that apartment as of yet." - You can only deduct expenses after the property is "placed in service" (available for rent). If not in service yet, these costs must be added to the property's basis and depreciated. The $2,500 de minimis rule lets you expense (not capitalize) individual purchases under $2,500, but only after the property is in service.
- "I'm starting to do wholesale investments. I'm still a W-2 employee, yet I will resign soon. Is it recommended that I start my LLC now, and why?" - Yes, start your LLC now for liability protection when entering contracts. Begin with a disregarded LLC in the state where you're wholesaling. Once established and generating consistent income, consider making an S-Corporation election to save on self-employment taxes.
- "I have a trading account, but I do not actively trade in it. Should I set up a trading partnership for it?" - If you're not actively trading, a simple Wyoming LLC for asset protection is sufficient. For active traders with significant expenses, consider the limited partnership structure with a C-Corporation general partner to shift some income and deduct expenses that aren't allowed on personal returns.
Resources:
Schedule Your Free Consultation
https://andersonadvisors.com/strategy-session/?utm_source=the-best-entity-for-real-estate-syndications-and-maximum-tax-benefits&utm_medium=podcast
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=the-best-entity-for-real-estate-syndications-and-maximum-tax-benefits&utm_medium=podcast
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Tuesday Mar 18, 2025
Tuesday Mar 18, 2025
Today, Anderson Advisors attorneys Toby Mathis, Esq., and Eliot Thomas, Esq., discuss topics including navigating inherited IRAs and potential Roth conversions to understanding crucial deadlines for spousal and non-spousal inheritances. The questions explore filing for trading LLCs with expenses but no income, leveraging C-Corps for medical cost reimbursements, and addressing real estate tax considerations including depreciation recapture. Key insights include combining 1031 exchanges with 121 exclusions when converting investment properties to primary residences, maximizing education and travel deductions in real estate transactions, and utilizing strategic business entities, defined benefit plans, and 401(k)s to shelter active income.
Send your tax questions to taxtuesday@andersonadvisors.com.
Highlights/Topics:
- “Can you roll an inherited IRA into a Roth IRA before the 10 year liquidation time limit is over? If so, will it be a taxable event?” - Typically no, especially for non-spousal inherited IRAs.
- “I took 2024 off, had no W-2 income, and did no trading.” “However, I had some trading expenses, monthly subscriptions. Do I need to file an individual 1040 return and/or Form 1065 for my trading LLC, even though I had no W-2 income and did no trading?” - Yes, file to account for trading expenses.
- “I am in the process of creating a trading partnership with the C-Corp. Due to an accident 20 years ago, I have high medical expenses and want to use the C-Corp to reimburse my out-of-pocket medical expenses. I have caregivers who work three hours per day. Can I reimburse myself for the salary? I pay them through the C-Corp. What other medical expenses can I reimburse?” - Yes, using Section 105 plan for reimbursements.
- “I have short-term rental property managed by a management company. Before the end of the year, I’m taking over management duties. Does the passive income switch to active or does the passive income stay passive?” - No, managing yourself doesn’t change income to active.
- “When selling a rental property, do you have to pay 25% depreciation recapture tax on things that have been depreciated down to zero and have been gone or deleted for over a year?” - Yes, recapture applies to fully depreciated assets.
- “Can I apply both 1031 like-kind exchange and 121 exclusion to an investment property? Yes, with strategic planning for property transitions.
- “Can I sell my investment home, apply 1031, and make the replacement home my primary residence?”
- “When selling my primary residence, do seller concession expenses help stay within the $250,000 capital gain exclusion? Example, help buyer with closing costs, any repairs, et cetera. I have spent over $3000.” - No, concessions don’t impact the exclusion directly.
- “I have spent over $3000 on different online real estate education programs. Can I deduct these as business expenses, or are only education expenses that are not online deductible?” - They are deductible only if related to continuing existing business education.
- “I attend a lot of investor’s meetings in person, travel with my personal not business automobile. How can I deduct these costs as business expenses,” - Track mileage and use accountable plans for deductions.
- “How do I save on taxes when wholesaling properties?” - Use business entities and retirement plans strategically.
Resources:
Schedule Your FREE Consultation
https://andersonadvisors.com/strategy-session/?utm_source=inherited-iras-can-you-convert-to-a-roth-tax-free&utm_medium=podcast
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=inherited-iras-can-you-convert-to-a-roth-tax-free&utm_medium=podcast
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Tuesday Mar 04, 2025
Tuesday Mar 04, 2025
Today, Anderson Advisors attorneys Barley Bowler, CPA, and Eliot Thomas, Esq. discuss topics including how 401(k) funds can be borrowed up to $50,000 without tax penalties while confirming that backdoor Roth IRA contributions made in 2024 but converted in 2025 still allow for additional 2025 contributions. Eliot and Barley discuss why S-corporations cannot deduct wellness expenses through accountable plans unless medically prescribed, and confirm the 20% Qualified Business Income deduction applies across multiple businesses. For entity structures, they recommended against holding appreciating real estate in corporations, favoring disregarded LLCs for asset protection. Regarding trading partnerships with C-corporations, these need written contracts for guaranteed payments, and confirmed short-term rental owners can switch to self-management to claim material participation benefits and accelerated depreciation through cost segregation.
Send your tax questions to taxtuesday@andersonadvisors.com.
Highlights/Topics:
- "Are there ways to withdraw funds from a 401(k), a retirement account, without moving it into an IRA?" a sponsored plan versus an individual plan? "We're also starting a nonprofit business. And how can we avoid that 10% early withdrawal penalty?" - Take a loan from your 401(k) for up to $50,000 without tax/penalty.
- "I attempted to do a backdoor Roth IRA conversion. On December 24th, I did it at the end of the year. I'm a high-income earner, was not aware of the financial institution, and had made a temporary change. There was some hold time for the funds. We made a deposit contribution at the end of the year. The question here is, the $7000 post-tax contributed to the traditional IRA in December was not available to convert? We went over the past the end of the year to the 2025 tax year, and we're wondering how that's treated since the conversion was completed in 2025, but the contributed contribution occurred in 2024. Is another $7000 contribution allowed?" - Yes, you can make another $7000 contribution in 2025 for another conversion.
- "Can we use this to reimburse for gym membership, supplements, wellness plans, stuff like that?" - No, wellness plans aren't tax-deductible unless medically prescribed.
- "My S-corporation provides financial services." Another question. We're talking about the qualified business income deduction, that 199A. That's a pretty good deduction, 20%. Good chunk of deduction. "Can we take that if we have two different businesses? How does that work? What's that look like?" - Yes, you can take the 199A deduction for both businesses simultaneously.
- "I have two LLCs holding trading accounts, so a couple of different LLCs." We're going to talk about our trade structure a little bit differently. We also have just what we call a safe asset holding straight. If we have a brokerage account, high-value collectibles, or something like that. "Does putting a rental property into a disregarded LLC have any tax benefits?" "Can I transfer the interest of a disregarded to a holding company or to a living trust?" - Yes, with in-kind transfers; check with a broker; generally no tax consequences.
- "I have a trading partnership." "Do I need a contract?" We're talking about guaranteed payments here, a very unique payment to a partner. - Yes, need a written contract detailing services between a partnership and C-corp.
- "What are the pros and cons of holding real estate investments in a disregarded LLC, C-corp versus S-corp?"- Avoid S/C-corps for appreciating property; use disregarded LLCs with management entity.
- "We're buying our first short-term rental this year. Considering using a third-party property manager, can I manage the property next year with material participation?" - Yes, you can manage it yourself in year two and claim cost segregation benefits.
Resources:
Schedule Your FREE Consultation
https://andersonadvisors.com/strategy-session/?utm_source=how-to-use-401k-funds-to-start-a-nonprofit&utm_medium=podcast
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=how-to-use-401k-funds-to-start-a-nonprofit&utm_medium=podcast
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
https://www.tiktok.com/@tobymathisesq
https://www.youtube.com/@ClintCoons
Tuesday Feb 25, 2025
Tuesday Feb 25, 2025
Real estate visionary Neal Bawa, CEO of Grocapitus and MultifamilyU, returns to the podcast. Neal always presents a compelling data-driven forecast that should capture every investor's attention. Despite current market uncertainties, Bawa reveals a significant 5-million-unit housing shortage alongside plummeting inflation rates, positioning the US as the strongest performer among developed economies. Most notably, he predicts a dramatic surge in both single and multi-family rent growth during 2026-27, driven by high interest rates creating supply gaps. With homeownership projected to decrease to 60% within a decade, the rental market is poised for unprecedented strength. This perfect storm of undersupply, shifting demographics, and economic conditions suggests a golden opportunity for strategic real estate investors, particularly in the multi-family sector, with promising rent growth anticipated as early as late 2025.
Highlights/Topics:
- Hard data trumps market fear: why the numbers tell a different story
- US economy dominates globally as inflation drops from 6% to 2.4%
- Rising national wealth meets housing crisis: housing investment opportunity
- New construction wave promises better prices for entry-level housing market
- Five million unit shortage creates perfect storm for 2026-27 housing gap
- Massive rent increases predicted across all housing sectors in 2026-27
- Historic shift: Homeownership dropping to 60%, rental demand soars nationwide
- Real estate investments outperform during global inflationary cycles and market shifts
- 2025 forecast: Interest rates and delinquencies reshape investment landscape ahead
- Strategic opportunity: Significant rent growth predicted for late 2025 market
- Visit multifamilyu.com to dive deeper into these insights!
Resources:
https://multifamilyu.com/
Schedule Your FREE Consultation
https://andersonadvisors.com/strategy-session/?utm_source=predicting-2025-real-estate-trends&utm_medium=podcast
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=predicting-2025-real-estate-trends&utm_medium=podcast
https://andersonadvisors.com/
Tuesday Feb 18, 2025
Tuesday Feb 18, 2025
We have now hit 237 episodes of Tax Tuesday! Today, Anderson Advisors attorneys Toby Mathis, Esq., and Eliot Thomas, Esq., discuss topics including depreciation strategies, with detailed explanations of how bonus depreciation differs from cost segregation analysis. The conversation also covers real estate professional status requirements, home office deductions, and the strategic use of management C-corporations to maximize tax benefits. Other key topics included the limitations of 1031 exchanges for partnership interests, tax strategies for international property purchases, meal expense deductions under current tax law, and the benefits of a stepped-up basis for inherited properties. You’ll hear practical strategies for leveraging existing properties rather than selling them and included insights on how to minimize tax exposure through various investment structures and borrowing strategies.
Send your tax questions to taxtuesday@andersonadvisors.com.
Highlights/Topics:
- In 2024, I spent most of my time managing rental properties under our LLC (not in a C or S management corp). I will claim real estate professional status for 2024 tax returns. What home office expenses can I deduct from rental income? Should we consider creating a management C corporation to maximize deductions? - You can deduct a portion of home expenses (mortgage interest, property taxes, utilities, etc.) based on either square footage or number of rooms method.
- Is 100% bonus depreciation available in 2025? Is this the same as cost seg? - Cost segregation breaks down property components into different depreciation schedules (5, 10, 15 years) while bonus depreciation allows immediate write-offs of qualifying components.
- If you meet 750 hours as a real estate investor and own both commercial/non-residential real estate property and residential rental property, could you use Schedule C or Schedule E on your tax return? - Generally, long-term rentals go on Schedule E regardless of real estate professional status. Schedule C might be used for short-term rentals (average stay less than 7 days) with significant personal services provided.
- Does selling a partnership interest in a hotel business qualify for a 1031 exchange? How can you save on taxes on capital gain when you sell your partnership interest? - A partnership interest generally doesn't qualify for 1031 exchange (though the partnership itself could exchange the building).
- If I inherit a property and now use the property as Airbnb, do I need to depreciate the value of the property? - You should depreciate the property because the IRS will assume you took depreciation when you sell and tax you accordingly (recapture). You'll get a stepped-up basis at inheritance value to depreciate from.
- Can you comment on food and meals? When can those be expensed and how much? - Business meals are generally 50% deductible. Company-wide events like holiday parties or open houses with unrestricted attendance can be 100% deductible. Entertainment expenses are no longer deductible.
- I'm a full-time employee receiving W2 income and own two rental properties which I manage myself. Can I use the qualified business deduction (QBI)? - Yes, you can potentially qualify for the QBI deduction. The safe harbor rule requires 250 hours of rental services, but you may still qualify even without meeting this specific threshold if you can prove it's a trade or business.
- How can I avoid capital gains if I sell my rental home in the U.S. to purchase a multi-family home in Costa Rica? - Options include: living in the property for 2 of the last 5 years to qualify for primary residence exclusion, leveraging the U.S. property instead of selling, harvesting capital losses to offset gains, or investing in tax-advantaged opportunities to create offsetting losses.
- I have two rental properties in SoCal owned since 2009 using straight-line depreciation. If I 1031 exchange these properties into replacement properties of slightly higher value, can I start depreciation over and do it correctly? If I 1031 these properties into replacement properties of slightly higher value, does that mean I can start depreciation all over and do it correctly? Getting more tax benefit. How does this affect my basis? What about any recapture when I then sell later? - In a 1031 exchange, you'll have carryover basis from the relinquished property. The basis in the new property will be its purchase price minus deferred gain. Instead of selling, consider leveraging existing properties to buy additional real estate for more depreciation opportunities.
- What are the benefits of the step-up basis evaluation for a person's residence and investment property? - When inherited, properties receive a stepped-up basis to fair market value at death, allowing heirs to depreciate from the higher amount and potentially eliminate capital gains tax on appreciation that occurred during the deceased's lifetime.
Resources:
Schedule Your FREE Consultation
https://andersonadvisors.com/strategy-session/?utm_source=bonus-depreciation-in-2025&utm_medium=podcast
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=bonus-depreciation-in-2025&utm_medium=podcast
https://andersonadvisors.com/
https://www.youtube.com/@TobyMathis
Thursday Feb 06, 2025
Thursday Feb 06, 2025
In this episode, Toby Mathis, Esq., of Anderson Business Advisors, chats with Atticus LeBlanc, CEO of PadSplit. Toby and Atticus discuss the innovative approach PadSplit is taking to address homelessness and provide affordable housing. They dive into troubling statistics about homelessness in 2024 and how rising home prices and interest rates are impacting the housing market. PadSplit’s model—offering multi-room rentals—provides a solution for both underserved communities and real estate investors, creating a two-sided marketplace. The conversation covers the operational benefits for landlords, the low turnover rates, and the impact PadSplit has on helping residents transition out of homelessness. Learn how this model offers affordable housing in 24-48 hours for under $300, while benefiting investors by reducing costs and increasing revenue. It’s a win-win for both society and your investment portfolio!
Highlights/Topics:
- Toby’s PadSplit experience, frightening stats on homelessness for 2024
- Increasing home prices, interest rates are not helping single-family residences
- PadSplit rooms are a great solution for the underserved, and for investors
- Reducing barriers to entry for the unhoused, revenue increases for landlords
- How PadSplit operates as a two-sided marketplace
- Different scenarios using PadSplit for multi-room home rentals
- Standard costs for a “turn” as a landlord, saving with PadSplit
- Early intervention for issues is easier with a PadSplit scenario
- Residents have thousands of options if they don’t care for the room
- What are the eviction rates with PadSplit?
- What percentage of residents move from unhoused situations? This is the “invisible working population’ - not people on the street with a cardboard sign.
- Residents can get a room within 24-48 hours, for under $300
- So something good for society, and something good for yourself
- Share this with investors you know
Resources:
https://www.linkedin.com/in/atticus-leblanc-3960466/
https://www.padsplit.com/
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