Several of today’s tax questions are related to STRs (Short-term rentals) like Airbnb and VRBO. Toby Mathis and Jeff Webb of Anderson Advisors discuss the differences between passive or active income on these popular investment properties, and answer additional tax-related questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

Investing in multiple family syndications - I think when you make an aggregation election, you're electing to treat all your rental activities as one activity

Setting up ongoing support for 501(c)(3) organizations that support the advancement of religion - Make it a private foundation. Spell out your values and then say, here are the organizations that I believe meet that at this time- but understand how wildly society and religion might change over time

Short-term rentals/hotel syndications - active or passive income? Unless you’re an employee like the general manager of the investment property, you’re passive. This is not a rental activity, period. Hotel syndication or short-term rental, just remove the ‘rental’ and it’s a regular business

A real estate investor pays almost no taxes, but her husband is a 1099 contractor with a huge tax burden. Should they put some properties in his name? If you’re filing jointly, it won’t matter. You could also donate a property for a community service/non profit to get the deduction of the full market value

There are still actions you can take if you’re getting killed on 2021 taxes, the clock has not stopped on 2021yet!

Resources:

Email us at Tax Tuesday

Get Clint Coons’ Book

https://www.amazon.com/Next-Level-Estate-Asset-Protection/dp/1950863883

Tax and Asset Protection Events

https://andersonadvisors.com/real-estate-asset-protection-workshop-training/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw

Is the housing market actually in trouble? All the clickbait articles and doomsayers would have you believe so, but the facts are very different.

In this episode, Toby Mathis of Anderson Business Advisors welcomes Neal Bawa back to the show. Neal is the founder and CEO of Grocapitus, a commercial real estate investment company, and CEO of MultifamilyU, an apartment investing education company. He’s known as the Mad Scientist of Multifamily and uses the power of numbers to acquire properties and create profit for investors.

Neal walks us through the facts and data surrounding our economy right now, and looks at historical trends to predict that by mid to late 2023, we will probably be looking at much better interest rates than we’re seeing currently. People may not realize that in the global economy, the U.S. is still one of the cheapest real estate markets, relative to individual salaries, and Neal explains that we’re actually lucky that we have a Fed that can help correct our markets when they begin to spiral out of control.

Highlights/Topics:

Fed rates: look at nine past recessions to see how the market corrects

Freight costs: watch container costs from China to predict global demand

S. economy: we are the strongest in the world, other countries are much worse off than we are currently

Clickbait: ignore the noise and alarmist articles you see on social media, look for the data and facts

Unemployment and housing demand: demand will return to normal, but prices will remain high

Retail and Travel: performing/demand is better than ever

Europe’s housing market: the majority of properties are owned by investors

Looking at historical data: the 2007/08 bubble is the only anomaly of the last 100 years!

Liquidity: get yours in line now while it’s cheap

The U.S. real estate market: compared to India, China, Europe, it’s the cheapest in the world relative to individual salaries

Resources:

Gro Capitus Website

https://www.grocapitus.com/

MultiFamily Website

https://multifamilyu.com/

Listen to Neal’s previous appearance

https://andersonadvisors.com/podcast/real-estate-investing-with-analytics/

Fbx.freightos.com

https://fbx.freightos.com/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw

How do you get started in house hacking? There’s several strategies for brand new investors getting started and the biggest investors in the industry looking to pocket some serious change and save a buck or make an extra buck.

Today, Clint Coons of Anderson Business Advisors talks to Kelton Todd with Women's Real Estate Investor Network. Also, Kelton is co-owner of Todd Team Investments.

Whether mentoring one-on-one or delivering a keynote presentation, there is one word that describes Kelton’s goals—results. Kelton inspires others to take action and change the direction of their lives through creating their own financial freedom. He is now offering Empire Academy, a fully comprehensive, results-oriented real estate investing education program.

Highlights/Topics:

College Roommate Strategy: Buy a house, live rent-free in bedroom, rent out the rest

Vacation Home: Rent out just a bedroom or entire place temporarily to generate revenue

Challenges: Look out for drugs, parties, and things like that in college towns

Relationships: Know if you can live with person; different personalities create conflict

American Dream Strategy: Buy property using government-backed loans with little down

FHA: Via same loan process, acquire duplex, triplex, or quadplex and rent out other units

Women's Real Estate Investors Network: Good foundation, education, understanding

Ultimate Empire Builder Strategy: Buy something small and turn it into something big

Moving Up: You become the Joneses that everyone’s trying to keep up with

Risks: You must be willing to take some risk to make money—inflation isn't slowing down

Resources:

Women's Real Estate Investors Network

https://womensrein.com/

Women's Real Estate Investors Network Terms of Use

https://withoutfearofherfuture.com/

Airbnb

https://www.airbnb.com/

VRBO

https://www.vrbo.com/

HomeAway

https://homeaway-com.com/

26 U.S. Code 121 Exclusion

https://www.law.cornell.edu/uscode/text/26/121

Clint Coons

https://andersonadvisors.com/clint-coons/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw

If you are into Airbnb or VRBO, what are the top tax benefits and loopholes for short-term rentals? Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

We have to clean the short-term rental the first year to get the hours necessary for active/material participation. It is a 90-to-120 (minute or mile) drive one way. Since we will be working, can we stay in the unit that night without counting it as personal use? You can include the travel time. However, staying the night will not count toward working on it. It definitely counts as personal use.

I have a beach house that I'm starting to rent out, so I got a DBA business name. I've been renovating and fixing it up to make it more attractive. I have a regular job and was told that if I made more than $150,000, I would not be able to write off my expenses and costs associated with my rental. Is this true? It depends on if it’s a rental or residential investment. Also, in some states and counties, the DBA is a fictitious name, and it offers no kind of protection or benefit at all.

Can you explain the short-term rental tax benefit and how to get 100 hours of material participation? If short-term rentals are seven days or less, it's a business. Determine if it’s 1245 or 1250 property and passive or active/material participation income.

I have a four-unit that I want to live in and rent out the other three units. What are all the tax deductions and write-offs I can use to zero out earnings? Bifurcate it into two properties. One unit would be your personal residence and the other 75% would be rental properties. Any expenses related to your rental unit would go against your real estate taxes and mortgage interest.

For all questions/answers discussed, sign up to be a Platinum member to view the replay!

Go to iTunes to leave a review of the Tax Tuesday podcast.

Resources:

Next Level Real Estate Asset Protection by Clint Coons

https://www.amazon.com/Next-Level-Estate-Asset-Protection/dp/1950863883

Cost Segregation Authority

https://aba.link/CSA

Real Estate Professional Status

https://www.irs.gov/pub/irs-utl/33-Real%20Estate%20Professionals.pdf

Capital Gains, Losses, and Sale of Home

https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home

26 U.S. Code 121 Exclusion

https://www.law.cornell.edu/uscode/text/26/121

Schedule E

https://www.irs.gov/forms-pubs/about-schedule-e-form-1040

Anderson Business Advisors

https://andersonadvisors.com/

Anderson Business Advisors on YouTube

http://aba.link/YouTube

Anderson Business Advisors on Facebook

https://www.facebook.com/AndersonBusinessAdvisors/

Anderson Business Advisors Podcast

https://andersonadvisors.com/podcast/

Small multifamily real estate does exist. You don’t have to have hundreds of units, syndicate, bring in investors, and make it complicated. So, how do you get started investing in small multifamily real estate and produce cash flow?

Today, Clint Coons of Anderson Business Advisors talks to Jen and Stacy Conkey, Founders of Warriors of Wealth and the Remote Multifamily Investing Academy™. They are two experts who know how to get into smaller deals that generate massive cash flow.

Jen and Stacy Conkey have more than 20 years of experience as entrepreneurs and real estate investors. Through their diverse real estate experiences, Jen and Stacy know what it takes to identify deals and make offers on properties that build long-lasting wealth. Also, Jen and Stacy share their knowledge and experience by teaching people what it takes to succeed in multifamily real estate investing with actionable strategies that make cash flow real estate fun and easy.

Highlights/Topics:

Multifamily Impediments: Too big, too expensive, too much inventory, too competitive

Where did Jen and Stacy start finding smaller deals? Education and just doing it

Multifamily: More than big apartment buildings—anything more than a single unit/home

Multifamily Categories: Get a good deal, good cash flow to learn process, then build up

Four Units & Under: Build relationships with realtors in local markets to find deals

Path of Progress: As things build out, it drives the value of other homes via BRRRR

BRRRR Strategy: Buy, renovate, rent, refinance value-add project and maximize capital

Stabilized vs. Value-add Strategy: When evaluating quad, is it a good investment?

Why Jen and Stacy never visit their properties, but do everything online/on the phone

Where do Jen and Stacy find contractors? Get them to go to a locked property and bid

How do they find a property manager? Google and then find and call all of them

Resources

Warriors of Wealth

https://www.warriorsofwealth.com/

Remote Multifamily Investing Academy

https://www.wowaua.com/home

Facebook Group: https://www.facebook.com/groups/PassiveIncomeRealEstateInvesting

Thumbtack

https://www.thumbtack.com/

HomeAdvisor

https://www.homeadvisor.com/

Angie's List

https://www.angi.com/

Marco Polo

https://www.marcopolo.me/

Clint Coons

https://andersonadvisors.com/clint-coons/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw

Are you a real estate professional? Then, how do you avoid an IRS audit? Toby Mathis and Jeff Webb of Anderson Advisors answer your tax questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

Do you pay tax on discrimination judgment? If so, how much percentage? What qualifies as non-taxable income? Usually, pain and suffering is non-taxable and then compensatory judgments where they're paying you for lost wages is always taxable because your wages would have been taxable.

Are solar credits available for the installation of solar panels and equipment on an RV or travel trailer? What if the RV or travel trailer is used to live in for a substantial part of the year? You can put solar panels on your main home and second home. Your RV could qualify to be your second home as long as it has a bathroom, kitchen, and sleeping area.

We plan to claim qualified real estate professional status for my unemployed wife this year. We have been maintaining records, and she has been using a separate phone and email to track all her real estate efforts. We live in New Jersey, and if we get audited for this, what will the IRS likely ask for and how many years back? Forget about the phone and its deductibility and the email. Instead, keep good logs of her time spent to meet the various tests for real estate professional status. You may be asked about any contemporaneous records and numbers. If you are a real estate professional and you're accelerating depreciation, you'll need your cost seg report and records of your purchase and improvements. It is unlikely that you will be audited.

For all questions/answers discussed, sign up to be a Platinum member to view the replay!

Go to iTunes to leave a review of the Tax Tuesday podcast.

Resources:

Homeowner’s Guide to the Federal Tax Credit for Solar

https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics

26 U.S. Code § 45L - New energy efficient home credit

https://www.law.cornell.edu/uscode/text/26/45L

Inflation Reduction Act of 2022

https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/15/by-the-numbers-the-inflation-reduction-act/

Real Estate Professional Status

https://www.aicpa.org/resources/article/tax-rules-for-real-estate-professionals

121 Exclusion

https://www.irs.gov/taxtopics/tc701

Opportunity Zones

https://www.irs.gov/credits-deductions/opportunity-zones-frequently-asked-questions

Anderson Business Advisors

https://andersonadvisors.com/

Anderson Business Advisors on YouTube

http://aba.link/YouTube

Anderson Business Advisors on Facebook

https://www.facebook.com/AndersonBusinessAdvisors/

Anderson Business Advisors Podcast

https://andersonadvisors.com/podcast/

What is the single-most effective way to affect your adjusted gross income (AGI) in the conservation easement realm? Preserve land while deducting taxes. There are people who are doing really good things with conservation easements. Is Donald Trump one of them? 

In this episode, Toby Mathis of Anderson Advisors talks to Tyler Surat about tax incentives for conservation easements.

Tyler works in the renewable energy industry. His work involves solar involvement, solar installation, and solar sales in southern Colorado. Tyler talks to clients about renewable energy—the benefits and tax savings.

Highlights/Topics:

Why might people put solar on a property they own or even investment properties? Aside from the benefits of being green, contributing back to the grid, and knowing that a perpetual power bill can become cost controlled by your solar investment, there are financial reasons.

Explain the economics of it. Do most people finance solar systems? On a residential level, most people finance solar systems because most don’t have $35,000 available. Ultimately, a finance payment is in exchange for a power bill.

Why did the U.S. government create a program for conservation easements? As a way to incentivize a private conservation effort because it cannot single-handedly serve every piece of land that should be conserved.

What is a conservation easement? When you place boundaries on a property to where development cannot happen.

Why would you partner in a deal to buy land that will be devalued considerably? Your investment is essentially the developed cost and the government is giving the marketable developed value as a deduction. You get 25% of your money back that you invested as income. Now, your investment turns into a deduction of your AGI.

Resources:

Tyler Surat on LinkedIn

https://www.linkedin.com/in/tyler-surat-1a17881b%20Steel%20City%20Solar%20https:/steelcitysolar.us/

Tyler Surat’s Email

Tyler Surat’s Phone Number: 719-580-3051

Steel City Solar

https://steelcitysolar.us/

Conservation Easements Benefits for Investors

https://andersonadvisors.com/podcast/conservation-easements-benefits-for-investors/

Internal Revenue Service (IRS) – Dirty Dozen List

https://www.irs.gov/newsroom/dirty-dozen

Bureau of Land Management

https://www.blm.gov/

Toby Mathis

http://tobymathis.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCaL-wApuVYi2Va5dWzyTYVw

Anderson Advisors

https://andersonadvisors.com/

Answers to tax questions are never quite as straightforward as you want. Toby Mathis and Jeff Webb of Anderson Advisors talk about how dividends are taxed (how to reduce your tax bill) and answer additional tax-related questions. Submit your tax question to taxtuesday@andersonadvisors.

Highlights/Topics:

What are the tax implications of selling stock and using the proceeds to invest in real estate? It depends. If you sell some stock and then go out and buy some real estate, one actually has nothing to do with the other, except in one circumstance - if you buy real estate in a qualified opportunity zone.

What's the best way to avoid taxes when getting income from forex trading? The IRS is actually very hard on forex traders. There's one tool called, the 988 election. When you do forex trading, it's subject to the 1256 rules. No matter when you bought and sold it, 60% gets treated as long-term, 40% as short-term.

Can I get a hard money loan with no collateral? Maybe, but it depends solely upon the lender. A hard money loan is money from a private lender, not from a bank.

I bought a real estate course in April 2022 and then started my LLC in May 2022. Can I write-off the cost of the course as a business expense on my taxes? It depends primarily on how your LLC is being taxed. If it's being taxed as a corporation, a C Corp, you can use those costs and the C Corp should reimburse you.

I have a nonprofit mentoring business that I often fund with my personal finances. Is there any way that I can write this money off on my taxes? Instead, let the nonprofit pay its own expenses. Every time you give them cash, they should give you a receipt. Anytime you fund a nonprofit, it's going to be a charitable donation. As long as you document it, then the organization is paying that expense.

For all questions/answers discussed, sign up to be a Platinum member to view the replay!

Go to iTunes to leave a review of the Tax Tuesday podcast.

Resources:

Wills and Trusts

https://andersonadvisors.com/living-trusts/

Opportunity Zones

https://www.irs.gov/credits-deductions/businesses/opportunity-zones

1031 Exchange

https://www.investopedia.com/financial-edge/0110/10-things-to-know-about-1031-exchanges.aspx

Wash Sale/Loss Rule

https://www.investopedia.com/terms/w/washsalerule.asp

Capital Gains and Losses (Schedule D)

https://www.irs.gov/forms-pubs/about-schedule-d-form-1040

Entity Formation

https://andersonadvisors.com/entity-formation/

Anderson Advisors

https://andersonadvisors.com/

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCX5nh607M8hSBLiMB9MgbIQ

Anderson Advisors on Facebook

https://www.facebook.com/AndersonBusinessAdvisors/

Anderson Advisors Podcast

https://andersonadvisors.com/podcast/

There is no greater path to wealth for you and your future generations than through real estate, but the biggest challenge is getting started on that journey.

Today, Clint Coons of Anderson Business Advisors talks to Brett Hadley about how to get started in real estate investing and the need to network to find deals.

Brett started at ground level with nothing and built up his investing into multifamily and syndications. He explains what that journey was like for him, how the market looks right now, and what he did. Brett offers insight on what you should focus on, putting teams together, and how to approach real estate investing.

Highlights/Topics:

Brett’s Backstory: Where he came from and what it took to buy his first house

Biggest Mistake: Getting in the game before getting educated first and foremost

Lesson Learned: Value of investing in yourself via education is extremely important

Anderson Advisory Group: Guides, leads, and establishes asset protection to grow

Accelerators and Masterminds: Network enables ability to execute vast amounts of deals

Start Small: You can have capital to execute a deal and go in and do what you promised

Real estate is real estate—understand the basics and the foundations to build a house

Changing Minds: Show people results from hard work, dedication, and ability to execute

Like-minded People: Portfolio grows faster with those who know more than you that help

Yin and Yang: Partnership is a marriage; be careful who you partner with and can trust

Team Effort: Get experienced people who have done it, been there, and closed deals

Preferential Treatment? Build relationships to benefit from network and close deals

Finish Line: Find a great deal, know it's going to cost you, and be able to execute/close

Current Market: Find area with tailwinds—it's going to be a competitive environment

Resources

BAB Investments

http://www.babinvestment.org/

The War Room

https://military-millionaire-academy.teachable.com/p/the-war-room

Service Academy Business Mastermind (SABM)

https://sabmgroup.com/

Real Estate Accelerator

https://sabmgroup.com/realestate

Personal Mentoring: The Apartment King - Brad Sumrok

https://bradsumrok.com/personal-mentoring

The Secrets of Successful Syndication Seminar - Radio Real Estate Guys

https://realestateguysradio.com/events/how-to-raise-money-for-real-estate-investing

Clint Coons

https://andersonadvisors.com/clint-coons/

Clint Coons on YouTube

https://www.youtube.com/c/RealEstateAssetProtection

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCX5nh607M8hSBLiMB9MgbIQ

A lot of people make a lot of money by investing in self storage. How do you get started in it and collect mailbox money to put yourself into a different asset class and create retirement plans or a financial future that you’ve always wanted?

Today, Clint Coons of Anderson Business Advisors talks to Ryan Gibson, CIO of Spartan Investment Group, which has a half-billion under management and more than 300 million square feet of self storage.

Highlights/Topics:

What attracted Ryan to self storage? 3 Es: Easy to own, easy to evict, easy to maintain

Why did Ryan start Spartan? Less involvement and fewer restrictions from government

Is self storage insulated from the economy? Self storage tends to be recession resistant

How did Ryan find and acquire his first deal? Off-market by sending letters to owners

What due diligence did Ryan do? Learn about the industry from top operators

Why did Ryan go the syndication route? To bring the opportunity to his investors

What are the demographics for opportunities? Check demand, occupancy, underwriting

Are there operators that handle the management of units? Yes, small and regional ones

Is there a minimum size for evaluating units? Depends on price thresholds, expectations

What should investors avoid? Flood zones, smaller properties, and overpriced facilities

Is it worth it to build from the ground up? Yes, but the stakes are much higher

What are the rents for self-storage units? $15 a square foot or higher per year

Resources

Spartan Investment Group

https://spartan-investors.com/

Bob Copper - Self Storage 101

https://selfstorage101.com/

Jay Graham - Self Storage Advisor

https://www.storageadvisors.com/brokerage

Inside Self Storage (ISS)

https://www.insideselfstorage.com/

Inside Self Storage Store

https://shop.insideselfstorage.com/

Clint Coons

https://andersonadvisors.com/clint-coons/

Clint Coons on YouTube

https://www.youtube.com/c/RealEstateAssetProtection

Anderson Advisors on YouTube

https://www.youtube.com/channel/UCX5nh607M8hSBLiMB9MgbIQ