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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.
Episodes
Tuesday Oct 04, 2022
Tuesday Oct 04, 2022
Several of today’s tax questions address bonus depreciation and when you can take it on single and multiple property groupings, including on short term rentals. Toby Mathis and Elliot Thomas, tax attorney, of Anderson Advisors, discuss the detailed specifics relating to several different tax scenarios involving bonus depreciation. They also discuss cost segregation and frontloading depreciation deductions for real estate assets into the early years of ownership. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- Taking the 5,7, or 15-year depreciation - You can only choose one, but you can spread them out over different years and different properties.
- Bonus depreciation - equipment leasing company rents to a) a construction company and b) another company with no employees. Should they add a third? - No, adding would have the opposite effect. If you wanted to group a and b together, you probably could. This is active income and if you want to avoid self-employment tax, pay yourself a small salary.
- A listener rents a single family property on flat lot that gets a lot of rain/water damage, can they deduct rain barrels/hardware? Yes, you can do it all in the first year, bonus depreciation, as it is not an “improvement” and it’s under $2500 per line item.
- Can I group short term rental activities if one property has an out-of-state property manager? This falls under passive activity loss rules - a STR can be passive if you’re not participating. Each rental is a business, like a pizza parlor. This is a trader business. Make a statement for aggregation on your return.
- Can I amend my 2021 taxes to do cost segregation? Yes you can, the deadline is Oct. 17th- send us how much you saved!
- A US citizen gets gift of property in another country. Do I need to report to IRS? Typically no, and you pay no tax, but fill out a form if property value is over $100K and foreign. You have to list it on Form 3520.
- Bonus depreciation on rental, if taken in first year of service, can I use any of depreciation for next year? It’s only the first year that you break out that property.
- If a CPA does your taxes, and you get revised/audited, it’s ultimately only your responsibility at the end of the day.
- Shout out to the staff for helping to answer questions in the middle of tax season
Resources:
taxtuesday@andersonadvisors.com
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Tuesday Sep 27, 2022
Tuesday Sep 27, 2022
In this episode of Anderson Business Advisors, Toby Mathis speaks with Jeff Mason and Chris Hammond about cash balance pension plans for business owners. This is not a 401(k), it’s not an IRA, it’s a way to defer and even reduce a portion of the taxes you might need to pay and set yourself up with an annual income when you retire - if you are a business owner.
This is for all business entities. True pass-throughs, S Corps, sole proprietorships, and partnerships work best in this savings scenario. Many people that have even heard of defined benefit plans, or cash balance plans, might think you can’t start contributing until later in life, and that used to be true, but now people like Chris and Jeff are designing plans for people in their 30s.
Jeff and Chris will go over what the benefits, timelines, and rules are regarding these plans, give you some sample scenarios with actual clients they have helped, and also answer some specific questions that Toby has about their validity, value and future potential for participants.
Highlights/Topics:
- The basics - How business owners can set up an income for themselves at retirement, the requirements to contribute, how much you can put in, how much you can take out and the tax implications
- Some examples of Jeff’s clients and the actual numbers they are working with
- Deadlines and potential increases in contribution limits from the IRS
- Are Jeff and Chris going to try to “sell you” stuff if you go to them for help? No- the retirement community is very small, everyone would know if you were operating in an unethical way. We want more referrals, not less, so everything is highly ethical and we don’t take advantage of people
- Get in touch with Jeff and Chris - there’s no cost for your initial consultation and even developing a sample plan - they just want to see if their services can help you!
Resources:
jmason@redwoodrs.com
Call Jeff Mason 815-516-0560
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Thursday Sep 22, 2022
Thursday Sep 22, 2022
In this episode, Clint Coons of Anderson Business Advisors welcomes Kim Lalande, Founder and CEO of Key.
Key is a ‘one-stop shop’ that partners with quality vacation rental homes (usually 3+ bedrooms and a certain aesthetic) to take all of the “concierge” burden off of the host or homeowner’s plate and provides one place to book all the in-home services to enhance each guest’s stay. Before launching KEY.co in 2015, Kim was the Director of Business Development for DLA Piper, a law firm representing many leading technology companies.
I talk with Kim about some of the reasons that investors who own or are looking for short-term rental properties should use this type of service. From my own experience with a rental in Hawaii that I sold because I hated doing all the work with guests, it is obvious what a relief this service would be to any short-term property owner. Kim says that naturally most of the “vacation destinations” with beaches like Hawaii, Florida, Nantucket, and The Hamptons are perfect spots to invest, but there are also some up-and-coming areas such as Austin, Nashville and Charlotte that are hotspots for short-term rentals. You’ll get better reviews and more bookings when you offer a concierge service such as Key, and there are a number of tax benefits as well.
Highlights/Topics:
- Kim came up with the idea for Key during one of her own short-term rental stays
- The types of “quality” homes Key represents - they personally vet every home
- The most attractive markets: Data shows lake, beach, Florida, Hawaii, Austin, Nantucket, Hamptons, mostly vacation destinations
- How should a person stage their rental? Think high end hotel
- Using Key services - what’s the return on cost of your services?
- At Anderson, we say if you spend 100 hours managing it, you can accelerate the depreciation. Key shares all their marketing and promotion with each homeowner to increase bookings
- Today’s short term rental market is even getting large hotel chains participating. If you DON’T have a service like this, it’s harder and harder to compete
- Each type of renter needs different services - families vs. couples vs. bachelorette party. Flexible service is best, trips types are so different
- Cleaning, pre-arrival groceries should be automatically included, along with a “mid-stay” cleaning
- Smaller properties (condos, townhomes) will have high volume, large homes may only need to rent out six times a year with their higher cost
- Make sure your rental is in the “center” of local activities (beach, skiing), people don’t want to drive on vacation
- Outlier homes, drive to go anywhere, ppl don’t want to go driving, not nec city center, lake? Boat rentals/beach, center of activities.
- The pandemic took many rentals off the market - people moved out of city centers to their second homes
- It’s important with today’s hybrid/remote workers to include highspeed internet and a desk/office area – consider adding a cool background wall for video calls!
Resources:
https://www.linkedin.com/in/kimshrum/
https://partners.key.co/
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Tuesday Sep 20, 2022
Tuesday Sep 20, 2022
Several of today’s tax questions are related to STRs (Short-term rentals) like Airbnb and VRBO. Toby Mathis and Jeff Webb of Anderson Advisors discuss the differences between passive or active income on these popular investment properties, and answer additional tax-related questions. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- Investing in multiple family syndications - I think when you make an aggregation election, you're electing to treat all your rental activities as one activity
- Setting up ongoing support for 501(c)(3) organizations that support the advancement of religion - Make it a private foundation. Spell out your values and then say, here are the organizations that I believe meet that at this time- but understand how wildly society and religion might change over time
- Short-term rentals/hotel syndications - active or passive income? Unless you’re an employee like the general manager of the investment property, you’re passive. This is not a rental activity, period. Hotel syndication or short-term rental, just remove the ‘rental’ and it’s a regular business
- A real estate investor pays almost no taxes, but her husband is a 1099 contractor with a huge tax burden. Should they put some properties in his name? If you’re filing jointly, it won’t matter. You could also donate a property for a community service/non profit to get the deduction of the full market value
- There are still actions you can take if you’re getting killed on 2021 taxes, the clock has not stopped on 2021yet!
Resources:
taxtuesday@andersonadvisors.com
https://www.amazon.com/Next-Level-Estate-Asset-Protection/dp/1950863883
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Thursday Sep 15, 2022
Thursday Sep 15, 2022
Is the housing market actually in trouble? All the clickbait articles and doomsayers would have you believe so, but the facts are very different.
In this episode, Toby Mathis of Anderson Business Advisors welcomes Neal Bawa back to the show. Neal is the founder and CEO of Grocapitus, a commercial real estate investment company, and CEO of MultifamilyU, an apartment investing education company. He’s known as the Mad Scientist of Multifamily and uses the power of numbers to acquire properties and create profit for investors.
Neal walks us through the facts and data surrounding our economy right now, and looks at historical trends to predict that by mid to late 2023, we will probably be looking at much better interest rates than we’re seeing currently. People may not realize that in the global economy, the U.S. is still one of the cheapest real estate markets, relative to individual salaries, and Neal explains that we’re actually lucky that we have a Fed that can help correct our markets when they begin to spiral out of control.
Highlights/Topics:
- Fed rates: look at nine past recessions to see how the market corrects
- Freight costs: watch container costs from China to predict global demand
- S. economy: we are the strongest in the world, other countries are much worse off than we are currently
- Clickbait: ignore the noise and alarmist articles you see on social media, look for the data and facts
- Unemployment and housing demand: demand will return to normal, but prices will remain high
- Retail and Travel: performing/demand is better than ever
- Europe’s housing market: the majority of properties are owned by investors
- Looking at historical data: the 2007/08 bubble is the only anomaly of the last 100 years!
- Liquidity: get yours in line now while it’s cheap
- The U.S. real estate market: compared to India, China, Europe, it’s the cheapest in the world relative to individual salaries
Resources:
https://www.grocapitus.com/
https://multifamilyu.com/
Listen to Neal’s previous appearance
https://andersonadvisors.com/podcast/real-estate-investing-with-analytics/
https://fbx.freightos.com/
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Tuesday Sep 13, 2022
Tuesday Sep 13, 2022
How do you get started in house hacking? There’s several strategies for brand new investors getting started and the biggest investors in the industry looking to pocket some serious change and save a buck or make an extra buck.
Today, Clint Coons of Anderson Business Advisors talks to Kelton Todd with Women's Real Estate Investor Network. Also, Kelton is co-owner of Todd Team Investments.
Whether mentoring one-on-one or delivering a keynote presentation, there is one word that describes Kelton’s goals—results. Kelton inspires others to take action and change the direction of their lives through creating their own financial freedom. He is now offering Empire Academy, a fully comprehensive, results-oriented real estate investing education program.
Highlights/Topics:
- College Roommate Strategy: Buy a house, live rent-free in bedroom, rent out the rest
- Vacation Home: Rent out just a bedroom or entire place temporarily to generate revenue
- Challenges: Look out for drugs, parties, and things like that in college towns
- Relationships: Know if you can live with person; different personalities create conflict
- American Dream Strategy: Buy property using government-backed loans with little down
- FHA: Via same loan process, acquire duplex, triplex, or quadplex and rent out other units
- Women's Real Estate Investors Network: Good foundation, education, understanding
- Ultimate Empire Builder Strategy: Buy something small and turn it into something big
- Moving Up: You become the Joneses that everyone’s trying to keep up with
- Risks: You must be willing to take some risk to make money—inflation isn't slowing down
Resources:
Women's Real Estate Investors Network
https://womensrein.com/
Women's Real Estate Investors Network Terms of Use
https://withoutfearofherfuture.com/
https://www.airbnb.com/
https://www.vrbo.com/
https://homeaway-com.com/
https://www.law.cornell.edu/uscode/text/26/121
https://andersonadvisors.com/clint-coons/
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Tuesday Sep 06, 2022
Tuesday Sep 06, 2022
If you are into Airbnb or VRBO, what are the top tax benefits and loopholes for short-term rentals? Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- We have to clean the short-term rental the first year to get the hours necessary for active/material participation. It is a 90-to-120 (minute or mile) drive one way. Since we will be working, can we stay in the unit that night without counting it as personal use? You can include the travel time. However, staying the night will not count toward working on it. It definitely counts as personal use.
- I have a beach house that I'm starting to rent out, so I got a DBA business name. I've been renovating and fixing it up to make it more attractive. I have a regular job and was told that if I made more than $150,000, I would not be able to write off my expenses and costs associated with my rental. Is this true? It depends on if it’s a rental or residential investment. Also, in some states and counties, the DBA is a fictitious name, and it offers no kind of protection or benefit at all.
- Can you explain the short-term rental tax benefit and how to get 100 hours of material participation? If short-term rentals are seven days or less, it's a business. Determine if it’s 1245 or 1250 property and passive or active/material participation income.
- I have a four-unit that I want to live in and rent out the other three units. What are all the tax deductions and write-offs I can use to zero out earnings? Bifurcate it into two properties. One unit would be your personal residence and the other 75% would be rental properties. Any expenses related to your rental unit would go against your real estate taxes and mortgage interest.
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Go to iTunes to leave a review of the Tax Tuesday podcast.
Resources:
Next Level Real Estate Asset Protection by Clint Coons
https://www.amazon.com/Next-Level-Estate-Asset-Protection/dp/1950863883
https://aba.link/CSA
Real Estate Professional Status
https://www.irs.gov/pub/irs-utl/33-Real%20Estate%20Professionals.pdf
Capital Gains, Losses, and Sale of Home
https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home
https://www.law.cornell.edu/uscode/text/26/121
https://www.irs.gov/forms-pubs/about-schedule-e-form-1040
https://andersonadvisors.com/
Anderson Business Advisors on YouTube
http://aba.link/YouTube
Anderson Business Advisors on Facebook
https://www.facebook.com/AndersonBusinessAdvisors/
Anderson Business Advisors Podcast
https://andersonadvisors.com/podcast/
Thursday Aug 25, 2022
Thursday Aug 25, 2022
Small multifamily real estate does exist. You don’t have to have hundreds of units, syndicate, bring in investors, and make it complicated. So, how do you get started investing in small multifamily real estate and produce cash flow?
Today, Clint Coons of Anderson Business Advisors talks to Jen and Stacy Conkey, Founders of Warriors of Wealth and the Remote Multifamily Investing Academy™. They are two experts who know how to get into smaller deals that generate massive cash flow.
Jen and Stacy Conkey have more than 20 years of experience as entrepreneurs and real estate investors. Through their diverse real estate experiences, Jen and Stacy know what it takes to identify deals and make offers on properties that build long-lasting wealth. Also, Jen and Stacy share their knowledge and experience by teaching people what it takes to succeed in multifamily real estate investing with actionable strategies that make cash flow real estate fun and easy.
Highlights/Topics:
- Multifamily Impediments: Too big, too expensive, too much inventory, too competitive
- Where did Jen and Stacy start finding smaller deals? Education and just doing it
- Multifamily: More than big apartment buildings—anything more than a single unit/home
- Multifamily Categories: Get a good deal, good cash flow to learn process, then build up
- Four Units & Under: Build relationships with realtors in local markets to find deals
- Path of Progress: As things build out, it drives the value of other homes via BRRRR
- BRRRR Strategy: Buy, renovate, rent, refinance value-add project and maximize capital
- Stabilized vs. Value-add Strategy: When evaluating quad, is it a good investment?
- Why Jen and Stacy never visit their properties, but do everything online/on the phone
- Where do Jen and Stacy find contractors? Get them to go to a locked property and bid
- How do they find a property manager? Google and then find and call all of them
Resources
https://www.warriorsofwealth.com/
Remote Multifamily Investing Academy
https://www.wowaua.com/home
Facebook Group: https://www.facebook.com/groups/PassiveIncomeRealEstateInvesting
https://www.thumbtack.com/
https://www.homeadvisor.com/
https://www.angi.com/
https://www.marcopolo.me/
https://andersonadvisors.com/clint-coons/
https://andersonadvisors.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
Tuesday Aug 23, 2022
Tuesday Aug 23, 2022
Are you a real estate professional? Then, how do you avoid an IRS audit? Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- Do you pay tax on discrimination judgment? If so, how much percentage? What qualifies as non-taxable income? Usually, pain and suffering is non-taxable and then compensatory judgments where they're paying you for lost wages is always taxable because your wages would have been taxable.
- Are solar credits available for the installation of solar panels and equipment on an RV or travel trailer? What if the RV or travel trailer is used to live in for a substantial part of the year? You can put solar panels on your main home and second home. Your RV could qualify to be your second home as long as it has a bathroom, kitchen, and sleeping area.
- We plan to claim qualified real estate professional status for my unemployed wife this year. We have been maintaining records, and she has been using a separate phone and email to track all her real estate efforts. We live in New Jersey, and if we get audited for this, what will the IRS likely ask for and how many years back? Forget about the phone and its deductibility and the email. Instead, keep good logs of her time spent to meet the various tests for real estate professional status. You may be asked about any contemporaneous records and numbers. If you are a real estate professional and you're accelerating depreciation, you'll need your cost seg report and records of your purchase and improvements. It is unlikely that you will be audited.
For all questions/answers discussed, sign up to be a Platinum member to view the replay!
Go to iTunes to leave a review of the Tax Tuesday podcast.
Resources:
Homeowner’s Guide to the Federal Tax Credit for Solar
https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics
26 U.S. Code § 45L - New energy efficient home credit
https://www.law.cornell.edu/uscode/text/26/45L
Inflation Reduction Act of 2022
https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/15/by-the-numbers-the-inflation-reduction-act/
Real Estate Professional Status
https://www.aicpa.org/resources/article/tax-rules-for-real-estate-professionals
https://www.irs.gov/taxtopics/tc701
https://www.irs.gov/credits-deductions/opportunity-zones-frequently-asked-questions
https://andersonadvisors.com/
Anderson Business Advisors on YouTube
http://aba.link/YouTube
Anderson Business Advisors on Facebook
https://www.facebook.com/AndersonBusinessAdvisors/
Anderson Business Advisors Podcast
https://andersonadvisors.com/podcast/
Thursday Aug 18, 2022
Thursday Aug 18, 2022
What is the single-most effective way to affect your adjusted gross income (AGI) in the conservation easement realm? Preserve land while deducting taxes. There are people who are doing really good things with conservation easements. Is Donald Trump one of them?
In this episode, Toby Mathis of Anderson Advisors talks to Tyler Surat about tax incentives for conservation easements.
Tyler works in the renewable energy industry. His work involves solar involvement, solar installation, and solar sales in southern Colorado. Tyler talks to clients about renewable energy—the benefits and tax savings.
Highlights/Topics:
- Why might people put solar on a property they own or even investment properties? Aside from the benefits of being green, contributing back to the grid, and knowing that a perpetual power bill can become cost controlled by your solar investment, there are financial reasons.
- Explain the economics of it. Do most people finance solar systems? On a residential level, most people finance solar systems because most don’t have $35,000 available. Ultimately, a finance payment is in exchange for a power bill.
- Why did the U.S. government create a program for conservation easements? As a way to incentivize a private conservation effort because it cannot single-handedly serve every piece of land that should be conserved.
- What is a conservation easement? When you place boundaries on a property to where development cannot happen.
- Why would you partner in a deal to buy land that will be devalued considerably? Your investment is essentially the developed cost and the government is giving the marketable developed value as a deduction. You get 25% of your money back that you invested as income. Now, your investment turns into a deduction of your AGI.
Resources:
https://www.linkedin.com/in/tyler-surat-1a17881b%20Steel%20City%20Solar%20https:/steelcitysolar.us/
tsurat@onetreeadvisors.com
Tyler Surat’s Phone Number: 719-580-3051
https://steelcitysolar.us/
Conservation Easements Benefits for Investors
https://andersonadvisors.com/podcast/conservation-easements-benefits-for-investors/
Internal Revenue Service (IRS) – Dirty Dozen List
https://www.irs.gov/newsroom/dirty-dozen
https://www.blm.gov/
http://tobymathis.com/
https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw
https://andersonadvisors.com/