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Assuming you are not living in the property, this would be considered a vacation property. There is a clause that allows you to rent out a vacation property for up to 14 days per year without it being an investment property. I am not sure if that allowance has been taken away or not. You need to check the tax code.
The PITA you are inviting into your life is the IRS if you don't follow all of the rules to the letter.
So if I have empty land, put an RV on it for personal use, but rent it out sort of air bnb style a couple of weeks - does that make it investment property?
Realistically - if you make some cash and do not claim the cash or any of the benefits of owning a rental property, you do not have an investment property.
I'm just wondering if any potential tax write offs would be worth it. I'm 62 and have never written off anything. I pay tons in taxes. Tax preparers are always commenting.
I'm just wondering if any potential tax write offs would be worth it. I'm 62 and have never written off anything. I pay tons in taxes. Tax preparers are always commenting.
I pay tons in taxes. Tax preparers are always commenting.
Then it sounds like this is the area to be focusing on.
How much of what you're hearing is objectively so.. and/or true beyond the common degree.
(hint: I doubt either is actually the case)
like i said , don't assume a cpa is the right person for the job .... many only know their area of expertise.. i guarantee you if you ask a cpa about the ramifications today of making a rental property your primary most will not know about the prorating today , just because they are cpa', unless this is the area they are in . .most do not keep up with changes in tax law in areas they do not do. a tax accountant is usually going to be the right person for personal tax issues if that is the scope of their work ..
lol - one thing I can conclude from this post is that you are not a CPA
And some are in private practice partnerships serving all manner of clients; business and personal.
Among these services will be tax advising and practice area specializing.
Real estate, especially at the low end, is common enough that most will do that well too.
Mine sure is the perfect person to discuss this sort of thing with. She specializes in taxes for small business and investment. So of course you may have to talk to someone who can help with your specific questions but they are not uncommon in my experience. Like anything you should do your due diligence and find the right person.
lol - one thing I can conclude from this post is that you are not a CPA
through my experiences as a investor and landlord for more than 30 years i know more about the ins outs and finer points then quite a few cpa's just because it is not the scope of what they do in their line of accounting
So if I have empty land, put an RV on it for personal use, but rent it out sort of air bnb style a couple of weeks - does that make it investment property?
You can't write off any of the land. You can write off land improvements of certain types, but not the land itself. Also, if you have a rental property, and take depreciation on it as a write off, that reduces your basis in the property, resulting in higher taxes when you sell. For example, you buy a rental property for $100,000, 50% is land and 50% is the building. Your depreciation is based on the $50,000 for the building. Let's say you own it for 10 years, and get write offs of $25,000(not a real number, for illustration only). Your basis in the entire property is now $75,000. If you sell for $100,000, you have a gain of $25,000 for tax purposes. If you sell for $150,000, you have a gain of $75,000. Anytime you buy a property, do an analysis of the actual cash flows and potential tax ramifications of the writeoffs.
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