Agent deductions, investor entity structure, cost segregation, the short-term rental rules, fix and flip taxation, self-directed IRAs, and bookkeeping for property managers.
39 guides, each written by a CPA licensed in the US and Canada.
A 1031 exchange lets real estate investors defer capital gains and depreciation recapture taxes by reinvesting sale proceeds into a like-kind property.
US TaxThe brokerage issues a 1099-NEC to the agent (or the agent's entity, if commissions are paid to the entity) for the total commissions paid during the year.
US Tax100% bonus depreciation is now permanent. A cost segregation study can reclassify 20-40% of your building into components you expense in year one.
US TaxCost segregation reclassifies building components from 27.5-year to 5, 7, or 15-year property, accelerating depreciation deductions.
US TaxMost rental property investors use LLCs for liability protection and pass-through taxation. Series LLCs isolate liability between properties.
US TaxQuarterly estimated tax payments are due April 15, June 15, September 15, and January 15 of the following year. The IRS.
US TaxFlipping houses makes you a dealer in the IRS's eyes, meaning ordinary income rates, self-employment tax, UNICAP on rehab costs, and no 1031 exchange.
US TaxHouse flippers are treated as dealers, not investors. Flip profits are ordinary income (not capital gains), subject to self-employment tax.
US TaxThe buyer is the one legally responsible for withholding and remitting, using Forms 8288 and 8288-A, within 20 days of closing.
US TaxHOA and condo association accounting separates exempt member assessments from taxable outside income under the Form 1120-H election in IRC 528.
US TaxReal estate agents who work from home can claim the home office deduction even if they maintain a desk at their brokerage.
US TaxSeparate LLCs isolate liability, not tax. The reason for multiple LLCs is liability isolation, not tax benefit. Compare LLC, S-Corp, and sole.
US TaxReal estate agents spend heavily on marketing, and nearly every dollar is deductible. Deductible marketing expenses for real estate agents include paid.
US TaxProperty managers issue Form 1099-MISC to owners for gross rents collected above $2,000 and Form 1099-NEC to independent contractor vendors above $2,000.
US TaxProperty management bookkeeping requires a strict split between the management company's own operating funds and the client owners' rental funds.
US TaxA property management business should be its own LLC, separate from any properties it owns, to wall off liability and plan for an S-corp election.
US TaxProperty management payroll splits between employees of the management company and employees of individual property owners.
US TaxProperty management revenue comes from several distinct fee types, each earned at a different point in the management cycle.
US TaxA property management company deducts its own ordinary and necessary business expenses under IRC 162, separate from any deduction the owner claims.
US TaxReal estate agents earning above $80,000 in net commissions should evaluate an LLC with an S-Corp election. A sole proprietor pays 15.
US TaxReal estate agents deduct business expenses on Schedule C (Form 1040). The largest deduction categories are vehicle expenses.
US TaxReal estate professional status under IRC 469(c)(7) converts rental activities from passive to non-passive.
US TaxReal Estate Professional Status (REPS) removes the per-se passive classification that IRC 469(c)(2) applies to all rental activities.
US TaxReal estate agents who build teams face tax decisions about how to classify team members (employee vs. The two primary team structures are the 1099 model.
US TaxA wholesale assignment fee is ordinary income, not a capital gain. The dealer classification triggers self-employment tax and blocks 1031 exchanges.
US TaxDeductible rental expenses (Schedule E, Part I): - Mortgage interest: The full amount of interest paid on the loan for the rental property.
US TaxRental income is passive income subject to unique tax rules: depreciation shelters current income. How rental income is taxed: - Gross rental income minus.
US TaxReg 1.263(a)-3 draws the line between a currently deductible repair and a capital improvement that must be depreciated over the property's life.
US TaxReal estate agents earning commission income can shelter $23,500 to $70,000+ per year in retirement plans. The three main retirement plan options for real.
US TaxTraditional rentals go on Schedule E. The default for rental real estate income is Schedule E, where it is not subject to self-employment tax.
US TaxA security deposit is a liability when received, not income, and becomes taxable income only when it is actually applied to unpaid rent or damages.
US TaxA self-directed IRA can buy real estate, but if the IRA uses a mortgage (non-recourse debt) to fund the purchase. Covers key rules, filing requirements,.
US TaxSelf-storage is NOT an SSTB. Cost segregation on the building can reclassify 15-25% to shorter-lived property. Net margins run 40-60% at stabilization.
US TaxSelf-storage estimated tax considerations: - Year 1-3 with cost segregation: depreciation typically exceeds NOI. Tax loss.
US TaxSelf-storage deductions: Building and improvements: - Storage building construction: $25-$65 per sq ft depending on type (drive-up vs.
US TaxManaging Airbnb and VRBO properties layers platform Form 1099-K reporting, the 14-day rule under IRC 280A, and material participation questions.
US TaxShort-term rentals (average stay under 7 days) may not be classified as passive rental activity. The classification depends on services provided: Passive.
US TaxA short-term rental with an average stay of 7 days or less is not a rental activity for passive loss rules. Yes, if two conditions are met.
US TaxThe standard mileage rate for 2024 is 67 cents per mile. An agent who drives 20,000 business miles deducts $13,400. An agent.