High quality content, have been a big fan of your channel for a while! Quick question: Does irs have documents or guidance on what can be qualified for the 100 hour significant participation, if my str is 4 hours away that means 8 hours round trip spent on the road alone every time i go and deal with house related stuff, does this quality?
Question to Clint or anyone: A short term rental is tax advantageous really just for people with high ordinary income from a job, correct? I am retired from ordinary income, therefore it's better to use my properties as long-term rental homes, correct?
Thank you so much for this information Clint. I have a question, I purchased a property in Aug 2022, renovated it (new flooring, new vanities, window coverings, paint, toilets), listed it Jan 2023 as a STR, we have never personally lived in this house, it is strictly a rental for us. My accountant is telling me that we can't utilize bonus depreciation because it wasn't a rental before. Is this true, did it have to be a rental prior to me purchasing? Thanks!! I am also having a relative ask their accountant, but I don't know how much they know about STRs.
It doesn't matter when you purchased the property, it only matters when the property is "placed in service" as a rental (when it is first available to be rented). Your depreciation starts on the placed in service date. And if they are items that qualify for bonus depreciation, you are eligible to use bonus depreciation for 2023 if that's the year you placed it in service. Now, if you're wanting to use those losses to offset your W-2 income, you have to put in the hours to qualify for material participation in that tax year also (your past hours in previous tax years while you were renovating it don't help you with that).
Hi amazing video! Question does the property need to be owned by an LLC to do this? I want to do this to offset W2 taxes. I House hack by Airbnbing my rooms through an LLC. And I fit 7day, 100 hr criteria. However, my property is in my name. Will that stop me from being able to get the write off?
Passive income is different from active income. Everything is the video is dealing with passive income. You can lower your active income through a number of ways. Look for a good CPA that can explain this better.
An LLC doesn't make any difference, but the issue in that case is that you can't use this strategy for rooms you're renting in your home. If you're renting out part of the same "dwelling unit" that you personally live in, then you can't use this strategy because your rental losses can't exceed your rental income because of section 280A of the tax code.
Yes and Yes. Yes, it is phasing out and the amount you take depends on when the property was placed into service. Post 2018 and Pre 2021 your deduction is 100%.
@@ClintCoons Ok, but if they purchased assets in 2024 I believe the max bonus is 60% now correct? Then next year it is 40% and then after that it expires unless they extend/renew it.
High quality content, have been a big fan of your channel for a while! Quick question: Does irs have documents or guidance on what can be qualified for the 100 hour significant participation, if my str is 4 hours away that means 8 hours round trip spent on the road alone every time i go and deal with house related stuff, does this quality?
It can be used to meet the 100 hours but you will need to do more than just drive to check on the property.
Great vid!!!
Thanks
This is amazing information
Glad you think so!
Question to Clint or anyone: A short term rental is tax advantageous really just for people with high ordinary income from a job, correct? I am retired from ordinary income, therefore it's better to use my properties as long-term rental homes, correct?
Yes
Thank you so much for this information Clint. I have a question, I purchased a property in Aug 2022, renovated it (new flooring, new vanities, window coverings, paint, toilets), listed it Jan 2023 as a STR, we have never personally lived in this house, it is strictly a rental for us. My accountant is telling me that we can't utilize bonus depreciation because it wasn't a rental before. Is this true, did it have to be a rental prior to me purchasing? Thanks!! I am also having a relative ask their accountant, but I don't know how much they know about STRs.
It doesn't matter when you purchased the property, it only matters when the property is "placed in service" as a rental (when it is first available to be rented). Your depreciation starts on the placed in service date. And if they are items that qualify for bonus depreciation, you are eligible to use bonus depreciation for 2023 if that's the year you placed it in service. Now, if you're wanting to use those losses to offset your W-2 income, you have to put in the hours to qualify for material participation in that tax year also (your past hours in previous tax years while you were renovating it don't help you with that).
The time spent on serving up the property for Airbnb, does those count towards 100 hours?
yes
for STR (with conditions met) can I also deduct the (mortgage on the property + expenses + depreciation) as active income from W2?
Yes this is a deduction against your income.
Hi amazing video! Question does the property need to be owned by an LLC to do this? I want to do this to offset W2 taxes. I House hack by Airbnbing my rooms through an LLC. And I fit 7day, 100 hr criteria. However, my property is in my name. Will that stop me from being able to get the write off?
It does not.
Passive income is different from active income. Everything is the video is dealing with passive income. You can lower your active income through a number of ways. Look for a good CPA that can explain this better.
An LLC doesn't make any difference, but the issue in that case is that you can't use this strategy for rooms you're renting in your home. If you're renting out part of the same "dwelling unit" that you personally live in, then you can't use this strategy because your rental losses can't exceed your rental income because of section 280A of the tax code.
Is the bonus depreciation for rental assets phasing out like it is for businesses? Can they still take 100% bonus on 7, 10, 15 year assets in 2024?
Yes and Yes. Yes, it is phasing out and the amount you take depends on when the property was placed into service. Post 2018 and Pre 2021 your deduction is 100%.
@@ClintCoons Ok, but if they purchased assets in 2024 I believe the max bonus is 60% now correct? Then next year it is 40% and then after that it expires unless they extend/renew it.
@@stephenmurray1657 That is correct.