Latest / Financial Survival Network / Tax Hacks The IRS Fears Most - Anne Gannon #6266

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Tax Hacks The IRS Fears Most - Anne Gannon #6266 · Financial Survival Network

• 0:00
  Speaker 1: You know, it does make a difference if you can
• 0:02
  Speaker 1: only get forty percent return compared to one hundred or
• 0:04
  Speaker 1: even eighty percent. So I definitely think it impacts decisions,
• 0:08
  Speaker 1: and I don't think it necessarily hurts.
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  Speaker 2: You're listening to Carrie Leutz's Financial Survival Network, where you
• 0:14
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• 0:18
  Speaker 2: thrive in today's trying times. You need the Financial Survival
• 0:22
  Speaker 2: Network now more than ever. Go to Financial Survivalnetwork dot
• 0:27
  Speaker 2: com and get your free newsletter and gift. Financial Survival
• 0:32
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• 0:38
  Speaker 3: And welcome.
• 0:39
  Speaker 4: You are listening to and watching the Financial Survival Network.
• 0:42
  Speaker 4: I'm your host, Carrie Lutz. Well, we're almost at the
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  Speaker 4: end of March, and do you know what comes after March?
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  Speaker 3: April? And do you know what comes smack dab in
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  Speaker 3: the middle of April.
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  Speaker 4: Yes, you'd like to forget it, just like I would always,
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  Speaker 4: But we're talking about tax time and well, as you know,
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  Speaker 4: there's a lot of pitfalls, a lot of complications, a
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  Speaker 4: lot of things that you need to be thinking about
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  Speaker 4: here and my next guest can help you. And Gannon
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  Speaker 4: CPA and does a lot of advising and tax prep
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  Speaker 4: for real estate investors, short, long term, any kind you
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  Speaker 4: can think of.
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  Speaker 3: And it's great to have you on the show.
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  Speaker 1: Yes, thank you so much for having me. You're gready
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  Speaker 1: to be here.
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  Speaker 3: Great.
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  Speaker 4: So, taxes and real estate, what's the what's the biggest
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  Speaker 4: mistake that real estate investors make concerning their taxes?
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  Speaker 1: So, I think it's treating it, you know, as it
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  Speaker 1: were an asset costs, like really tracking it. I think
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  Speaker 1: the key with real estate investing, like anything else, is
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  Speaker 1: you have to get the rules, and you know, on
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  Speaker 1: the tax side, they are different depending on what you're
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  Speaker 1: investing in and how you're arresting in that. So I
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  Speaker 1: think you know what we were we start with a
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  Speaker 1: lot of our clients is just to make sure they
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  Speaker 1: understand the rules. My goal, you know, whether it's with
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  Speaker 1: business owners or relative investors, is just to give them
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  Speaker 1: back control, right Like you shouldn't have to wait for
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  Speaker 1: me to give you all the rules. But if I
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  Speaker 1: can educate you other rules of the game, then you're
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  Speaker 1: able to make better investment decisions. So you know, that's
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  Speaker 1: really my own Mmm.
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  Speaker 4: So what do you think the biggest mistake though that
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  Speaker 4: they're making that's costing them money?
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  Speaker 1: I mean I would say probably just paying attention to
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  Speaker 1: how it's getting reported on your taxture. I think a
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  Speaker 1: lot of for a long time, real estate would just
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  Speaker 1: sort of one of these things that no one really
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  Speaker 1: knew where it was, or if they did, if I'm
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  Speaker 1: a aguline or really looks at it. But I think
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  Speaker 1: then you go for a loan or you go to
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  Speaker 1: buy other property, and then you're asked all these questions,
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  Speaker 1: and especially when you look at the categorization. So many
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  Speaker 1: times I've seen people get hung up, whether it's do
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  Speaker 1: a lender trying to buy another property because you know,
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  Speaker 1: their improvement on the property was put in as repairs
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  Speaker 1: and they just didn't you know, GPA didn't really care,
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  Speaker 1: wasn't told or it was just checked that way, and
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  Speaker 1: there's a huge difference between you know, capital improvement and repair.
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  Speaker 1: A lot of times all those analysis things that are done,
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  Speaker 1: you know it makes difference. But they just be paying
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  Speaker 1: attention to how it's getting reported and making sure that's
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  Speaker 1: the right story.
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  Speaker 3: So how do you stop them from making that.
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  Speaker 1: Mistake to not get into the busy season approach? So Michael,
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  Speaker 1: with our clients is to really make sure that we're
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  Speaker 1: paying attention throughout the year that were looking for the
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  Speaker 1: end of the year, you know, so when we get
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  Speaker 1: to this year's return, we don't have any surprises. But
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  Speaker 1: I think, as the owner, don't be afraid to ask
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  Speaker 1: your repair of questions. I had a guyantane with just
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  Speaker 1: this year and he couldn't get a mortgage on a
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  Speaker 1: second property because someone put the new bathroom in as
• 3:48
  Speaker 1: a twenty grand repair, and lenders, if there's a repair,
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  Speaker 1: they think that every year. They think, oh if I
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  Speaker 1: had twenty thousand last year to eight thousand next year,
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  Speaker 1: they don't know. So you don't have to fuck right
• 4:04
  Speaker 1: looking at you know, that's an improvement you invested in
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  Speaker 1: the property, So ask the questions if you're not sure
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  Speaker 1: what those warms look like.
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  Speaker 4: From a tex standpoint. So some things you can write
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  Speaker 4: off right away, other things you have to do it
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  Speaker 4: over a period of years, right right, right.
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  Speaker 1: And it were not in one hundred percent bonus appreciation,
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  Speaker 1: So yes, there could be a different in the return,
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  Speaker 1: but in his return there wasn't. It didn't really matter
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  Speaker 1: because he couldn't take advantage of the loss anyway. So again,
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  Speaker 1: I think having that discussion before the return. It filed
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  Speaker 1: you know makes a.
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  Speaker 4: Different Okay, yeah, so about that, the bonus depreciation and
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  Speaker 4: all that. What you're thinking as far as where where
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  Speaker 4: the tax situation is going to be, I.
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  Speaker 1: Mean, I think nobody knows. A lot of what I've
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  Speaker 1: read is just that mid summer there should be an answer.
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  Speaker 1: I think the thought is that, you know, the hope
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  Speaker 1: is that one hundred percent comes back. I mean, otherwise
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  Speaker 1: we're in a forty percent bonus, which is not very
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  Speaker 1: beneficial to most people doing projects. You know, were last
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  Speaker 1: year was sixty. Before that I was eighty. I think
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  Speaker 1: the thought is that this year they have to do
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  Speaker 1: something out a lot of these rules. I think the
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  Speaker 1: other thing that's up at the end of this year
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  Speaker 1: would be to qualify business deduction with anyone who to
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  Speaker 1: pass through that could go away. So I think there's
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  Speaker 1: a lot that's on the table for this year, and
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  Speaker 1: you know, hopefully by the middle of the year we
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  Speaker 1: have an answer.
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  Speaker 3: Got it all right?
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  Speaker 4: So let me ask you a question about the bonus
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  Speaker 4: appreciation and all that good stuff.
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  Speaker 3: How big a deal was that.
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  Speaker 4: For the real estate community and what do you think
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  Speaker 4: the effects of providing it were.
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  Speaker 1: I think it's a huge benefit. I mean, I think
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  Speaker 1: even you can see the difference between being in a
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  Speaker 1: forty sixty or sixty forty that it does impact decisions.
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  Speaker 1: And you know, I think from attack standpoint, you're really
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  Speaker 1: it's the same pie. If you have one hundred thousand
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  Speaker 1: dollars asset or a million dollar asset, You're going to
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  Speaker 1: appreciate it over the life of the asset, so it's
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  Speaker 1: really the same piece. But if you're able to give
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  Speaker 1: people more at the beginning, it does really match to
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  Speaker 1: the cash outflow, so you are incentivizing people to reinvest.
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  Speaker 1: So I think it is part of the decision maker.
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  Speaker 1: A lot of our investor clients, you know, real estate
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  Speaker 1: investor clients, larger construction clients have said that they're kind
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  Speaker 1: of waiting because you know, it does make a difference
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  Speaker 1: if you can only get forty percent return, compare it
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  Speaker 1: to the hundred or even eighty percent. So I definitely
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  Speaker 1: think it impacts decisions, and I don't think it necessarily
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  Speaker 1: hurts the tax picture because they will get less than
• 6:47
  Speaker 1: future years. Right, you're going to pay more attack than
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  Speaker 1: future years because you're paid last this year.
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  Speaker 4: So a lot of your clients doing we're doing cost
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  Speaker 4: segregation studies.
• 7:00
  Speaker 1: Definitely more now that they were in the you know,
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  Speaker 1: six forty sixty split only, And it's really for people
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  Speaker 1: who are in the short term rental state because they
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  Speaker 1: are useful like this thirty nine years, whereas residential is
• 7:14
  Speaker 1: twenty seven and a half. So you know, that's a
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  Speaker 1: huge swing to go from year one GIU thirty nine.
• 7:21
  Speaker 1: So yes, I definitely think that it has puced more
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  Speaker 1: people to know what cost varations are where when you're
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  Speaker 1: a one hundred percent doesn't really matter.
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  Speaker 4: So if you're doing short term rentals, you can no
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  Speaker 4: longer you can't depreciate it like it was a residential
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  Speaker 4: real estate. Then did I get that right?
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  Speaker 1: Yeah, that's one of the rules that people need to
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  Speaker 1: really make sure. I understand that the short term rental
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  Speaker 1: is treated as more as in a business category, and
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  Speaker 1: so it's not a residential. It's not considered a residential
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  Speaker 1: for the property for the useful life. Yeah.
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  Speaker 3: Interesting, So yeah, which I did know that at one point.
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  Speaker 4: So you're like airbnbs and all that stuff our investment
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  Speaker 4: real estate, they're not considered residential.
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  Speaker 1: But on the flip side, they go against ordinary income
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  Speaker 1: in a lot of cases if you hit before criteria
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  Speaker 1: that the IRS says for being a bit rate it
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  Speaker 1: can offset ordinary income where a lot of real estate
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  Speaker 1: is considered passive and.
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  Speaker 3: Not of right, that's fascinating, all right, all right?
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  Speaker 4: So do you have like a checklist or something that
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  Speaker 4: you give your clients?
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  Speaker 3: Yes? Would you be willing to send that out of people?
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  Speaker 1: Definitely? Yes, I will, I will send well.
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  Speaker 3: Good. So when we do this, then hey, appreciate you
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  Speaker 3: coming on.
• 8:45
  Speaker 4: And and why don't you give us your email address?
• 8:50
  Speaker 4: Tell us your website so people, you'll send your free checklist,
• 8:55
  Speaker 4: which will be real helpful to you because you should
• 8:57
  Speaker 4: always have a checklist when you're doing taxes. So your
• 9:00
  Speaker 4: email address app.
• 9:01
  Speaker 1: Yet it's again and at the largogroup dot com.
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  Speaker 3: Okay, and the website's Largo Group dot com dot com. Yeah, excellent.
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  Speaker 4: All right, Now, if you got a question, you can
• 9:12
  Speaker 4: always send me an email Klatcarrielets dot com. We'll have
• 9:16
  Speaker 4: a link to and site to the Largo Group in
• 9:20
  Speaker 4: the show notes to this interview on Financial Survival Network
• 9:23
  Speaker 4: dot com. Just go there, click it take you right there.
• 9:27
  Speaker 4: And what we ask is when you're on the site,
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• 9:38
  Speaker 4: Talk to you again soon.
• 9:39
  Speaker 2: Thank you so much, Thank you, thanks for listening to
• 9:42
  Speaker 2: Carrie Lets's Financial Survival Network, your solution to today's trying times.
• 9:48
  Speaker 2: For the latest, go to Financial Survivalnetwork dot com. Financial
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  Speaker 2: Survival Network now more than ever,