How Short-Term Rentals Can Provide Big Tax Benefits to W-2 Employees [Tax Smart Daily

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Today let's talk about how short-term rentals allow investors to take rental tax losses, without qualifying as real estate professionals.
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Опубликовано:

7 июл 2021

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Комментарии : 44

@Alessandro1983 8 месяцев назад

This almost explains my question. I appreciate you breaking it down.

@user-pg5gx8yj1g Год назад

Amazing!! Thank you!

@bioluminescent6205 Месяц назад

Do you have to own the STR? For Instance if you rented a property with a self contained in law suite used as an airbnb, can you claim this?

@keithlyespiritu1894 2 года назад

What if the property is under your name, but you started an LLC to run the short term rental business?

@Kitman0304 Год назад

Depending on how you form your LLC, if you form a LLC taxed as a s-corporation, the profits/loss flow to your personal tax return

@davidjenkins7062 Год назад

If I rent out my Florida property for 90 days to one renter, then the balance of the year is to 7-days or less renters, so that the average length of stay is say, 6.8 days, does that meet the overall 7 day STR rules set by the IRS ?

@theinvestmentguy9041 2 года назад

Hi Brandon, new subscriber here! Great stuff! Question in regards to high w2 income earners with 5 STR properties. What is the best way to offset my W2 taxes and the passive income from STR?

@DaneFitzpatrick Год назад

by far the biggest factor to his claims, he's literally talking about a low income w2, tax loss is far limited to a high earner, particularly 150k and up

@jlaudamusic5190 8 месяцев назад

What if it’s a seasonal property, how much of the year does it have to be rented out to right off against W-2?

@josephstoll314 Год назад

Would this go on schedule C or Schedule E in this example you give?

@Nnnqqq689 Год назад

Hi I wonder if we report loss on rental income for so many years do you think that will trigger audit easily

@cdavilany13 5 месяцев назад

If you operate a short term rental, but for pets, does the same rules apply?

@SuperDarmik Год назад

Great video and explanation, kudos to your commitment!. One question, i am a w2 employed, is it possible to offset the capital gain tax from an selling an investment single family property by joining as a passive investor in a multi family transaction using bonus depreciation?

@TheRealEstateCPA Год назад

Yes, its possible. The loss from the passive investment, assuming its a partnership, would flow to the individual return and can offset the passive gains such as that from real estate.

@IParodyCentral 4 месяца назад

Is there a limit or cap on depreciation amount and does any AGI rules prohibit this ?

@FireplaceVideo1 2 года назад

Is Material participation rule applicable PER property? For example, if you own 4 Short Term Rentals, do you need to show material participation in each property? Or it is OK as long as you have a total of 100 hours material participation (and more than any one else) on ALL 4 properties? Would love to hear your thoughts on it.

@TheRealEstateCPA 2 года назад

Per property... unless you make a -4 or -9(g) election.

@antoniomunoz3886 2 года назад

Hello - thank you for ur channel good data!! Question- is the only way to take advantage of the short term rental tax benefit is thru a cost segregation study?

@tax-modern 2 месяца назад

Not necessarily. You can have a tax loss from regular depreciation if the numbers work out to give you a tax loss, and you can use the "STR loophole" to deduct that loss. A cost seg study is just a way to dramatically increase the amount of depreciation you can take all in one year. But it's not the best option in all situations.

@christopherjacob6209 Год назад

I wonder if this works for renting an RV on a platform like outdorsy

@learningtheropes1683 Год назад

Thanks for this vid. How do you PROOVE that you've spend the time required to qualify? Can you literally just type up the date and time spent on this property, and add it up at the bottom? Is there any particular format that the IRS would need to see it in if you were called in on an audit?

@TheRealEstateCPA Год назад

The best way to prove it is with a timesheet with the date, the property, the activity performed, and the amount of time it took. It could be a spreadsheet or a time-tracking app. It also needs to be reasonable otherwise they deem it not credible and will throw it out.

@chadsbalser 11 месяцев назад

This was a super informative video! Question - if using the rule relating to you being the only one performing work at the property, are there any minimum thresholds for time committed, or total rental volume? And is it just based on the CALENDAR year in which the property was purchased? In other words, could you buy a property in December, rent the property to one guest before the end of the year, spend one hour cleaning the property, log it, and qualify under that circumstance? And if so, could you rent it out as a STR for that whole month of December, and as soon as the calendar flips to January, rent it out as a long term rental on a go forward basis?

@tax-modern 2 месяца назад

If you're talking about the "substantially all" option for material participation, there isn't a particular minimum thresh hold for that one. But you really do have to be doing everything, all the cleanings, repairs, etc. Otherwise you would need to have 100 hours (and more than anyone else), or otherwise 500 hours. It's based on the calendar year (Jan - Dec). You can buy a property at the end of the year and potentially qualify, but you would need a bare minimum of at least 2 bookings to qualify it as an STR (based on a tax court case that established that minimum). You can change it to an LTR the next year, yes. But I would be cautious about pushing that too far. If you do a cost segregation study and take a big tax loss after renting it out as an STR for a month, then immediately change it to an LTR a month later, that may likely raise some red flags with the IRS about your intentions.

@DennisMinottiIIDO Год назад

Can you do a cost seg on a STR property outside of the US and claim bonus depreciation to use against W2 income? Or does the property have to reside within the US?

@TheRealEstateCPA Год назад

Bonus depreciation is not available on foreign property.

@LucasDargis 2 года назад

I have a duplex where one unit has a long-term tenant, and the other unit is used as a short term rental. How does this strategy apply to that type of property?

@pierdigiorgio5793 2 года назад

Hi Lucas I have a similar situation. Did you find out what strategy applies to that? thanks

@anwershaikh886 3 года назад

Thanks Brandon! What does materially participating in an STR mean? Is there the same 500 hour requirement? If I buy an STR in November can I still take bonus depreciation since I participated more than anyone else in the property?

@TheRealEstateCPA 3 года назад

Yes material participation is defined in Treas. Regs. Sec. 1.469-5T. There are 7 tests, the 500 hour tests is one of them.

@om51015 Год назад

@Anwer and @tax smart real estate. I also wanted to know if there is a seasoning rule for ownership as well. What did you end up doing? It’s November now and I wonder if I close on an str before year end if I can get the cost seg study and it qualify for the current year 2022. I make a high w2 so it still makes sense in this volatile market.

@anwershaikh886 Год назад

@@om51015 I am currently under contract closing at the end of November and going to do the 100 hours and more than anyone else criteria

@lebronjordan5689 Год назад

What are you guys using to log hours?

@kr0ze 4 месяца назад

Ever figure this out? I'm debating on what to use.

@SRE_LopezLab Год назад

Can you rent part of your primary home to qualify? Does it have to be a stand-alone property?

@THEGPROJEK Год назад

Great question!

@catwalk1470 4 месяца назад

Can you make your own Primary Residence home's 1 Room as STRs to write off High W2 Income ??

@tax-modern 2 месяца назад

No, unfortunately it has to be a separate "dwelling unit". When you rent a room in your home, your deductions on that are limited to your income from the rent.