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