Comments on: Tax Shelter — Real Estate Investors Should Beware the Professional Investor Trap http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/ Real Estate Investing through Purposeful Planning Thu, 16 Oct 2008 04:26:39 +0000 http://wordpress.org/?v=2.0.11 by: BawldGuy http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-10035 Fri, 08 Aug 2008 18:28:31 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-10035 Maria -- I know Sean personally, and he's the real deal. I asked him to come here and answer you personally. He has the official BawldGuy Seal of Approval. He's also smarter than the average bear. :) Maria — I know Sean personally, and he’s the real deal. I asked him to come here and answer you personally.

He has the official BawldGuy Seal of Approval.

He’s also smarter than the average bear. :)

]]> by: Sean Purcell http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-10034 Fri, 08 Aug 2008 18:22:07 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-10034 Maria, We would need to take a look at your tax returns and see what is really going on, but generally we can add the depreciation back into your gross income for loan purposes. Hope that helps. Feel free to email directly if I can answer further questions. Maria,

We would need to take a look at your tax returns and see what is really going on, but generally we can add the depreciation back into your gross income for loan purposes.

Hope that helps. Feel free to email directly if I can answer further questions.

]]> by: MARIA http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-10025 Fri, 08 Aug 2008 08:27:09 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-10025 HI, I'M A REAL ESTATE INVESTOR AND I AM TRYING TO REFINANCE A COUPLE OF MY RENTAL PROPERTIES. THE PROBLEM IS THAT THE AJUSTED GROSS INCOME ON MY TAX RETURN IS VERY LOW BECAUSE OF THE DEPRECIATION TO OFFSET THE INCOME. HOW CAN I PREPARE MY TAX RETURN SO THAT IT'S MORE APPEALING TO A BANK, YET STILL REDUCE MY TAXABLE INCOME? PLEASE ADVISE. THANKS! HI, I’M A REAL ESTATE INVESTOR AND I AM TRYING TO REFINANCE A COUPLE OF MY RENTAL PROPERTIES. THE PROBLEM IS THAT THE AJUSTED GROSS INCOME ON MY TAX RETURN IS VERY LOW BECAUSE OF THE DEPRECIATION TO OFFSET THE INCOME. HOW CAN I PREPARE MY TAX RETURN SO THAT IT’S MORE APPEALING TO A BANK, YET STILL REDUCE MY TAXABLE INCOME? PLEASE ADVISE. THANKS!

]]> by: BawldGuy http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-8000 Thu, 24 Apr 2008 19:27:50 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-8000 Sam -- I agree with you, but only in the sense of the time. When I said that I meant the agent was full time in the business, and made their living doing that work. The gold standard is a full time agent in the business, making a living -- easily documented for hours etc. I've never been challenged, nor has anyone I know, and there are plenty. Moreover, a few of my clients who've successfully made this happen, have never been challenged either. But then they documented everything from Day 1. The main client is a retired attorney who had spoken with the IRS on this subject before he took the leap to professional investor. It's now been seven returns without a peep. I don't know what else to tell you. Sam — I agree with you, but only in the sense of the time. When I said that I meant the agent was full time in the business, and made their living doing that work.

The gold standard is a full time agent in the business, making a living — easily documented for hours etc.

I’ve never been challenged, nor has anyone I know, and there are plenty. Moreover, a few of my clients who’ve successfully made this happen, have never been challenged either. But then they documented everything from Day 1.

The main client is a retired attorney who had spoken with the IRS on this subject before he took the leap to professional investor.

It’s now been seven returns without a peep.

I don’t know what else to tell you.

]]> by: Sam http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7986 Thu, 24 Apr 2008 08:49:56 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7986 Being a real estate agent is not as reliable as the setting sun. The IRS can and will disallow all hours as an agent for real estate professional under audit, an auditor told me this and I have seen it happen. If you do this prepare to appeal and potentially go to tax court. Also, the hours to meet the professional status have to be in a business which you materially participate. If anyone out there has had audits turn out differently, please post a response to this. Being a real estate agent is not as reliable as the setting sun. The IRS can and will disallow all hours as an agent for real estate professional under audit, an auditor told me this and I have seen it happen. If you do this prepare to appeal and potentially go to tax court.

Also, the hours to meet the professional status have to be in a business which you materially participate.

If anyone out there has had audits turn out differently, please post a response to this.

]]> by: BawldGuy http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7608 Wed, 02 Apr 2008 17:07:36 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7608 Yes, but I usually recommend folks get a comfortable understanding of the various code sections (for those who don't have enough pain in their lives) :) in a 'stand alone' fashion. IRS publications can sometimes be fast and loose with 'sections' and other words and concepts when they're writing in a larger context. In case you don't have the pdf of 544 for 2007 taxes, here's a link for you. Don't forget the Bayer. :) http://www.irs.gov/pub/irs-pdf/p544.pdf Yes, but I usually recommend folks get a comfortable understanding of the various code sections (for those who don’t have enough pain in their lives) :) in a ’stand alone’ fashion. IRS publications can sometimes be fast and loose with ’sections’ and other words and concepts when they’re writing in a larger context.

In case you don’t have the pdf of 544 for 2007 taxes, here’s a link for you. Don’t forget the Bayer. :)

http://www.irs.gov/pub/irs-pdf/p544.pdf

]]> by: Lee http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7605 Wed, 02 Apr 2008 16:57:43 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7605 Ummm... searching the IRS site, it looks like "section 1231 gain or loss" is best outlined for my purposes in IRS Publication 544. Sound correct? -thx Ummm… searching the IRS site, it looks like “section 1231 gain or loss” is best outlined for my purposes in IRS Publication 544.
Sound correct?

-thx

]]> by: BawldGuy http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7604 Wed, 02 Apr 2008 16:49:53 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7604 Lee -- Also, check 1231. The main thing is doing things on Purpose, right? Lee — Also, check 1231.

The main thing is doing things on Purpose, right?

]]> by: Lee http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7602 Wed, 02 Apr 2008 16:31:55 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7602 Thanks again for all the info. It has definiotely helped. I think I'm going to try read through IRS Pubs 550 (Investment Income and Expenses) and 527 (Residential Rental Property) to learn as much as I can comprehend on the subject in general. -Lee Thanks again for all the info.

It has definiotely helped.

I think I’m going to try read through IRS Pubs 550 (Investment Income and Expenses) and 527 (Residential Rental Property) to learn as much as I can comprehend on the subject in general.

-Lee

]]> by: Jeff Brown http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7484 Wed, 26 Mar 2008 16:31:48 +0000 http://www.bawldguy.com/tax-shelter-real-estate-investors-should-beware-the-professional-investor-trap/#comment-7484 Lee -- There's no difference -- it's me being tired and using poor language. Whatever you call it, as long as you aren't including the word 'dealer' you'll be fine. The phrase commonly used is Professional Investor. I'm a real estate professional, i.e. licensed real estate broker. One is used by the IRS while the other is not. Lee — There’s no difference — it’s me being tired and using poor language. Whatever you call it, as long as you aren’t including the word ‘dealer’ you’ll be fine.

The phrase commonly used is Professional Investor. I’m a real estate professional, i.e. licensed real estate broker. One is used by the IRS while the other is not.

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