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Old 07-10-2017, 05:04 PM
 
973 posts, read 1,403,765 times
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One more thing is that sometimes it will cost the landlord a significant sum to bring the space up to code for another use. For instance, my co-op has a space which a couple of food places were interested in but the cost of bring up the property to code was prohibitive for both the co-op and the prospective tenants.
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Old 07-10-2017, 07:39 PM
 
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Consider a building where actual yearly expenses are $100. It's vacant.

Landlord exaggerates (no third party involved, who's to check?) and claims $200 in expenses.

Tax deduction on the expenses, let's say 30%, would equal $60. (Assume landlord has sufficient other property to make full use of that deduction.)

So for landlord to come out ahead, he'd need to rent the building for more than $160.

Tax deductibility of easily gameable expenses doesn't turn an empty building into a gain, but it sure cushions the blow, and increases the rent a landlord will demand, which in turn reduces the number of possible tenants.

There are probably some other shenanigans going on as well, as well as some legitimate concerns.
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Old 07-10-2017, 07:44 PM
 
Location: New York, NY
7,549 posts, read 2,688,620 times
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Quote:
Originally Posted by eddiep83 View Post
all that does is help minimize losses somewhat, it's not a benefit, they are still losing money overall.

If you deduct $20k on your taxes for instance, the benefit is generally that you owe about $7k less in taxes, but you're still left with a net loss of $13k.
Quote:
Originally Posted by BlakeJones View Post
ding ding ding

waiting for the next moron to claim that something "is a write off" for a company when they have absolutely no concept of what a write off actually is
Ding ding ding what? The IRS looks at those who are in business as existing to make a profit, but that doesn't mean that all businesses don't try to minimize how much they pay in taxes by seeing how they can game the system. The small time landlords may just be getting by, but some of the bigger ones... They find all sorts of loopholes to maximize profit while paying as little in taxes as possible by maximizing write-offs.

Quote:
Originally Posted by randomperson2 View Post
Consider a building where actual yearly expenses are $100. It's vacant.

Landlord exaggerates (no third party involved, who's to check?) and claims $200 in expenses.

Tax deduction on the expenses, let's say 30%, would equal $60. (Assume landlord has sufficient other property to make full use of that deduction.)

So for landlord to come out ahead, he'd need to rent the building for more than $160.

Tax deductibility of easily gameable expenses doesn't turn an empty building into a gain, but it sure cushions the blow, and increases the rent a landlord will demand, which in turn reduces the number of possible tenants.

There are probably some other shenanigans going on as well, as well as some legitimate concerns.
Exactly... Am here to tell you having been through an IRS audit myself, it isn't *that* difficult to feign certain expenses. The IRS admits that they are short-staffed and don't have the man power to thoroughly check the way that they should.
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Old 07-12-2017, 08:23 AM
 
Location: Manhattan
20,134 posts, read 26,425,454 times
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So then, a landlord only needs to empty all his buildings and reduce his taxes to zero.
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Old 07-12-2017, 08:46 AM
 
Location: New York City
7,125 posts, read 5,496,520 times
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Quote:
Originally Posted by randomperson2 View Post
Landlord exaggerates (no third party involved, who's to check?) and claims $200 in expenses.
Who's to check?? The IRS, that's who. If he's audited that is not a simple case of denied deductions it's felony tax fraud
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Old 07-12-2017, 08:48 AM
 
Location: New York, NY
7,549 posts, read 2,688,620 times
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Quote:
Originally Posted by BlakeJones View Post
Who's to check?? The IRS, that's who. If he's audited that is not a simple case of denied deductions it's felony tax fraud
Right, and we all know how understaffed the IRS is...
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Old 07-12-2017, 08:51 AM
 
Location: New York City
7,125 posts, read 5,496,520 times
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Quote:
Originally Posted by pierrepont7731 View Post
Right, and we all know how understaffed the IRS is...
Understaffed so they have to allocate resources more efficiently. They're unlikely to audit individuals reporting under 100k but as a business owner with large assets such as manhattan property you are putting your assets & livelyhood in serious jeopardy by committing tax fraud, and you'll find no shortage of disgruntled people wanting to report landlords.

But you go right ahead and commit your felonies to save a few bucks
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Old 07-12-2017, 11:30 AM
 
547 posts, read 218,338 times
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Quote:
Originally Posted by BlakeJones View Post

But you go right ahead and commit your felonies to save a few bucks
And they do. For the IRS to bring a criminal tax fraud case, as opposed to an adjustment, the case will have to be remarkable in some way. Criminal tax fraud is surprisingly hard to prove, as it is basically the only kind of fraud where ignorance of the law can serve as a defense.

I cannot believe that there are innocents out there who think the same class of people who have blatantly ignored, e.g., the J-51 requirements, who routinely attempt to rent out RS apartments on the free market, who will steal utilities, who ignore building codes left and right, would be too scared to exaggerate their expenses.
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Old 07-13-2017, 05:53 AM
 
Location: Manhattan
20,134 posts, read 26,425,454 times
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Quote:
Originally Posted by pierrepont7731 View Post
Right, and we all know how understaffed the IRS is...
And we also know WHY it is understaffed.
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Old 08-23-2017, 11:18 AM
 
Location: New York City
7,125 posts, read 5,496,520 times
Reputation: 4875
In a Thriving City, SoHo’s Soaring Rents Keep Storefronts Empty
https://www.nytimes.com/2017/08/23/n...orefronts.html

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