Summary: the income are (rent, capital gains and recapture when sell). 9 Expenses: a) cash expenses - Repairs; professional fees as insurances, accountant, lawyer; Property tax; wages under 18 ,IC; mortgage interest; b) Depreciation; Capital gain exclusion; Active up to 25,000 loss; Home office expenses.
Thank you sir. I bought an investment property and turned it into an Airbnb for a couple of months. I take all the deductions you mentioned and I also use the property as my vacation home 6 to 8 weeks a year, so I have the best of all worlds - passive income, lots of tax deductions, and a vacation home.
I am repairing a new property and just stepping into the rental market. You have given golden knowledge in only the first two videos watched today. Thank you!!!!
You are a really great teacher, I must say. I work in the legal field specializing in tax, trusts, & estates; however, I’ve recently ventured into the finance side of the industry serving in the corporate trustee capacity. I do understand fiduciary taxation/trust accounting, but as for the inns and the outs of real estate investment, specifically residential rentals, which is for personal knowledge (I own a rental) I’ve been on the lookout for some seasoned advice. You have been the most pleasant to follow, extremely detailed but not unorganized / overwhelming in delivery, knowledgeable, and to the point! Thank you, sir! You definitely got a new subscriber! 👏💯
great content, i did ask my account about paying my teen give em 1099 and do a deduction, but they told me i need to be a S corp to do that, so i got a little lost there, any thoughts?
Hey Toby... you missed a major new(ish) category of deductions; DJT's "yuuge" gift to himself, which happens to also benefit owners of rental property... the pass-through entity 20% forgiveness. Even if you own a single rental property and your income is scheduled rather than through a traditional "Pass-through" entity (like an LLC) the IRS has interpreted this benefit to apply to your income. Any net income which is generated by your Rental "Business" is "Passed through" to your ordinary income, and is eligible for the 20% reduction. For those of us who are retired and own fully depreciated rental property(s) outright - and therefore generate a substantial taxable income - it's a major tax reducer.
The rise in tax rates is why I decided to roll over my 401k to a Roth IRA. I don’t want to be 59 and paying taxes on withdrawals from my retirement account.
Yes! You can easily deduct (from your primary residence) your mortgage interest, your home insurance, and your PMI (if you have PMI), AND you can also deduct your "home office" under certain circumstances. But don't trust me, I'm some random dude on TH-cam - please research this and read some tax books. I suggest starting with chat gpt to explain it to you, then further researching by reading the tax code yourelf, and then consulting a tax professional if you need. These claims mentioned above are very easy and helpful bring up your tax return by thousands of dollars, and can be done on TurboTax.
Can anyone explain the home office deductions where Toby talks about using an accountable plan for a management company? Can this be done with 2 rentals or do you need a larger portfolio?
That's a great question. For a more personalized answer, I suggest scheduling a free 45-minute consultation with my team. We’ll provide advice tailored to your specific situation. Visit: aba.link/9i0
@@TobyMathis so claiming a personal deduction on our primary residence for a home office that we use to specifically manage our rental properties that will start the depreciation process on our primary home that otherwise may have never started if we weren’t running a business out of it and it’s not a rental thus triggering recapture tax when we go to sell some day… is there anything we should know regarding this situation? I’m assuming that it’s not entirely calculated the same way since it’s not a rental property, nor are we depreciating the entire property, plus, we are only applying it to rental property passive and not earned active income, as well as primary residence property tax, mortgage interest, insurance, utilities, etc.
are you just spokes person ,because the ones that notified me I have never heard of when I was made to believe it would be Toby Mathis ,can you explain this it kind of like a bait and switch ,which raises a red flag with me .
Yes. You don't pay your dad's (or whoever else's) taxes. The depreciation goes against YOUR taxable income (or your companies should you classify it as an S or C corp, which is likely unnecessary unless you're making a LOT of profit from the 4plex) So you (as you're probably going through now) have to pay estate taxes of course, but once those estate taxes are paid and titles are in your name, a sale a gift a transfer, are all the same thing- a transfer of ownership. So yes you get to start depreciation lowering your personal income. Its pretty dope.
Very important but not said. At death the value "steps up" to the current market value. That washes away all the appreciation that is basically capitol gains that are not taxed at death.
Sorry, this is long, I work in this field so I always want to be clear and helpful when I can… Just to add a few caveats 😅 The step-up in basis (which ultimately is the reason that capital gains are not recognized until the property inherited is sold, but with a basis from date of death rather than when the decedent originally acquired, and also eliminates the prior depreciation, allowing the inheritor to start their own process) so long the property transferred was not held within certain business entities, [partnerships are okay (i.e., transfer upon death of partnership interests in which the partnership is holding real estate)], can’t be a self-directed IRA as an inheritance, in which the IRA invests in alternative assets (real estate) titled to the IRA; and also can’t be transferred thru an irrevocable trust, including grantor irrevocable trusts, by which the assets held in such trust are considered separate from the decedents taxable estate, (not to be confused with a revocable trust that automatically becomes irrevocable upon death as that is used to avoid probate upon allocating assets to beneficiaries and upon title transfer the heir/beneficiary/devisee will receive the step up in basis, which is the FMV on the date of death, not the date transferred or retitled (unless the executor elects for an alternative evaluation in which it can be six months from the date of death). The same process can be used if trying to avoid depreciation recapture tax by devising in your own estate planning the property to your beneficiaries or earlier than that by doing a 1031 exchange. Lastly, just to point out in case any confusion. The estate is responsible for estate tax, gift tax (or a “gift”) is not the same as an inheritance, as a gift is only applicable during the lifetime of the donor and used along side the federal lifetime gift/estate tax exemption (over 13.61 million right now and with a spouses portability election it doubles) so gifts made during the donors lifetime is only applied towards the 13.61 million (or double w/ spouse) exemption upon, if applicable, reaching the annual gift tax exclusion of 18k (or double with spouse) per donee per year. Then if the total taxable estate values more than the remaining exclusion, federal estate tax is due. Some states have their own gift / estate tax thresholds, but most importantly, some states have an inheritance tax, which the beneficiary is responsible for, not the estate. So, it’s important to factor those concepts in, and ensure you’re classifying the allocations / inheritance correctly in order to avoid confusion and tax error. An estate planning attorney and either a financial advisor or CPA (or all three) come in handy. 🙂 💯
yes, some time HOA if it is contains maintenance and management fees these would fall under cash as he explained earlier. You pay to third party to manage the property
As an information security professional for nearly 3 decades, I would never recommend that anyone share anything with anyone online or, in this case, in your company literature etc. due to the weirdos out there that can gain access to what your kid looks like, approximate age(s) of your kid(s). It's a poorly thought out idea at best....and I'm not even a parent. Don't do it folks. Don't be sharing your family pictures online with strangers! FB, Instagram etc. etc. Push away from the computer and rethink some popular habits......my two.five cents on that single comment. Otherwise, thank you again for the well thought out presentation, keeping it simple and to the point and focusing on one topic essentially.
Have questions about tax deductions? Sign up for a free consultation with my team to get your questions answered. 👉 aba.link/9i0
Summary: the income are (rent, capital gains and recapture when sell). 9 Expenses: a) cash expenses - Repairs; professional fees as insurances, accountant, lawyer; Property tax; wages under 18 ,IC; mortgage interest; b) Depreciation; Capital gain exclusion; Active up to 25,000 loss; Home office expenses.
Thank you sir. I bought an investment property and turned it into an Airbnb for a couple of months. I take all the deductions you mentioned and I also use the property as my vacation home 6 to 8 weeks a year, so I have the best of all worlds - passive income, lots of tax deductions, and a vacation home.
I am repairing a new property and just stepping into the rental market. You have given golden knowledge in only the first two videos watched today. Thank you!!!!
You are a really great teacher, I must say. I work in the legal field specializing in tax, trusts, & estates; however, I’ve recently ventured into the finance side of the industry serving in the corporate trustee capacity. I do understand fiduciary taxation/trust accounting, but as for the inns and the outs of real estate investment, specifically residential rentals, which is for personal knowledge (I own a rental) I’ve been on the lookout for some seasoned advice. You have been the most pleasant to follow, extremely detailed but not unorganized / overwhelming in delivery, knowledgeable, and to the point! Thank you, sir! You definitely got a new subscriber! 👏💯
Love your video! Thank you very much!😊
Hey Toby, if i am maintaining pool myself, can i deduct what i would have paid to a pool company?
Good video, thanks. Probably the best summary I’ve seen on this topic.
Glad you enjoyed it!
For your first example, how would you determine the value of the old roof when writing it off because you're taking it out of service?
What about if I own a home (mortgage payment) and move to an apartment, then rent the house. Can I apply any of these?
great content, i did ask my account about paying my teen give em 1099 and do a deduction, but they told me i need to be a S corp to do that, so i got a little lost there, any thoughts?
Hey Toby... you missed a major new(ish) category of deductions; DJT's "yuuge" gift to himself, which happens to also benefit owners of rental property... the pass-through entity 20% forgiveness. Even if you own a single rental property and your income is scheduled rather than through a traditional "Pass-through" entity (like an LLC) the IRS has interpreted this benefit to apply to your income. Any net income which is generated by your Rental "Business" is "Passed through" to your ordinary income, and is eligible for the 20% reduction.
For those of us who are retired and own fully depreciated rental property(s) outright - and therefore generate a substantial taxable income - it's a major tax reducer.
The rise in tax rates is why I decided to roll over my 401k to a Roth IRA. I don’t want to be 59 and paying taxes on withdrawals from my retirement account.
Great topic! Thank you! 😊
For my primary l leaving house can I write off tax deduction mortgage interest and mortgage insurance?
Yes! You can easily deduct (from your primary residence) your mortgage interest, your home insurance, and your PMI (if you have PMI), AND you can also deduct your "home office" under certain circumstances. But don't trust me, I'm some random dude on TH-cam - please research this and read some tax books. I suggest starting with chat gpt to explain it to you, then further researching by reading the tax code yourelf, and then consulting a tax professional if you need. These claims mentioned above are very easy and helpful bring up your tax return by thousands of dollars, and can be done on TurboTax.
Can anyone explain the home office deductions where Toby talks about using an accountable plan for a management company? Can this be done with 2 rentals or do you need a larger portfolio?
That's a great question. For a more personalized answer, I suggest scheduling a free 45-minute consultation with my team. We’ll provide advice tailored to your specific situation. Visit: aba.link/9i0
@@TobyMathis so claiming a personal deduction on our primary residence for a home office that we use to specifically manage our rental properties that will start the depreciation process on our primary home that otherwise may have never started if we weren’t running a business out of it and it’s not a rental thus triggering recapture tax when we go to sell some day… is there anything we should know regarding this situation? I’m assuming that it’s not entirely calculated the same way since it’s not a rental property, nor are we depreciating the entire property, plus, we are only applying it to rental property passive and not earned active income, as well as primary residence property tax, mortgage interest, insurance, utilities, etc.
Very educational
Good info!
Excellent knowledge. Straight fwd.
Thank you for sharing!
Hi Tobey… in management is it possible to add HOA fees that Im paying monthly in my rental property?
He said yes, in the video to that
@@Missmay777 thank you
Good video need more specific info on home office deduction
Great stuff!!
Glad you enjoyed it
Thank you.
Good video for landlord expenses.
Every account supposed to know this or do I need a special accountant??
They should definitely know this. These are pretty basic expenses
Every accountant except possibly some who specialize in something else
Can you do that on a investment but I don't rent it?
What about insurance cost on the property ?
He went over that, falls under his #2 category
are you just spokes person ,because the ones that notified me I have never heard of when I was made to believe it would be Toby Mathis ,can you explain this it kind of like a bait and switch ,which raises a red flag with me .
What if you inherit a 4 unit apt building..Does a new depreciation start when titled tranferred to me?
Yes. You don't pay your dad's (or whoever else's) taxes. The depreciation goes against YOUR taxable income (or your companies should you classify it as an S or C corp, which is likely unnecessary unless you're making a LOT of profit from the 4plex)
So you (as you're probably going through now) have to pay estate taxes of course, but once those estate taxes are paid and titles are in your name, a sale a gift a transfer, are all the same thing- a transfer of ownership.
So yes you get to start depreciation lowering your personal income. Its pretty dope.
Very important but not said. At death the value "steps up" to the current market value. That washes away all the appreciation that is basically capitol gains that are not taxed at death.
Sorry, this is long, I work in this field so I always want to be clear and helpful when I can… Just to add a few caveats 😅 The step-up in basis (which ultimately is the reason that capital gains are not recognized until the property inherited is sold, but with a basis from date of death rather than when the decedent originally acquired, and also eliminates the prior depreciation, allowing the inheritor to start their own process) so long the property transferred was not held within certain business entities, [partnerships are okay (i.e., transfer upon death of partnership interests in which the partnership is holding real estate)], can’t be a self-directed IRA as an inheritance, in which the IRA invests in alternative assets (real estate) titled to the IRA; and also can’t be transferred thru an irrevocable trust, including grantor irrevocable trusts, by which the assets held in such trust are considered separate from the decedents taxable estate, (not to be confused with a revocable trust that automatically becomes irrevocable upon death as that is used to avoid probate upon allocating assets to beneficiaries and upon title transfer the heir/beneficiary/devisee will receive the step up in basis, which is the FMV on the date of death, not the date transferred or retitled (unless the executor elects for an alternative evaluation in which it can be six months from the date of death).
The same process can be used if trying to avoid depreciation recapture tax by devising in your own estate planning the property to your beneficiaries or earlier than that by doing a 1031 exchange.
Lastly, just to point out in case any confusion. The estate is responsible for estate tax, gift tax (or a “gift”) is not the same as an inheritance, as a gift is only applicable during the lifetime of the donor and used along side the federal lifetime gift/estate tax exemption (over 13.61 million right now and with a spouses portability election it doubles) so gifts made during the donors lifetime is only applied towards the 13.61 million (or double w/ spouse) exemption upon, if applicable, reaching the annual gift tax exclusion of 18k (or double with spouse) per donee per year. Then if the total taxable estate values more than the remaining exclusion, federal estate tax is due. Some states have their own gift / estate tax thresholds, but most importantly, some states have an inheritance tax, which the beneficiary is responsible for, not the estate. So, it’s important to factor those concepts in, and ensure you’re classifying the allocations / inheritance correctly in order to avoid confusion and tax error. An estate planning attorney and either a financial advisor or CPA (or all three) come in handy. 🙂 💯
What deductions aren’t allowed if you’re not a “real estate professional”?
I recommend registering for a complimentary consultation with my team. We'll tailor our advice to your specific needs. Sign up here: aba.link/9i0
How about HOA？Is it deductible ?
yes, some time HOA if it is contains maintenance and management fees these would fall under cash as he explained earlier. You pay to third party to manage the property
Thank you for your content. I really appreciate it.
TH-cam has a animation video of the tax law Theft by deception, look for it.
My accountant lets me write of my long term insurance .
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30min video is 25min to lomg
Not for me! I can use virtually EVERY one of these strategies in managing my portfolio.
Every minute is valuable for me. Thank you for such a concise informative Video. Make them longer if you like.
As an information security professional for nearly 3 decades, I would never recommend that anyone share anything with anyone online or, in this case, in your company literature etc. due to the weirdos out there that can gain access to what your kid looks like, approximate age(s) of your kid(s). It's a poorly thought out idea at best....and I'm not even a parent. Don't do it folks. Don't be sharing your family pictures online with strangers! FB, Instagram etc. etc. Push away from the computer and rethink some popular habits......my two.five cents on that single comment.
Otherwise, thank you again for the well thought out presentation, keeping it simple and to the point and focusing on one topic essentially.
Thank you