1. TCJA
    1. Mortgage Interest
      1. Primary Residence Interest Deduction.
        1. Up to $750,000
        2. Only for loans originated after TCJA
        3. No Tax Deduction on HELOC loans
        4. No Limit on Rental Proceeds
      2. Interest Tracing
        1. HELOC → rental property → deductible interest
        2. The best way to do this is with a separate bank account for Rentals.
          1. Refi, Take Cash, Deposit in separate bank account
    2. Accelerated Depreciation
      1. Bonus Depreciation
        1. Applies to personal property (not real property)
        2. Applies to New and Used Items
      2. Section 179
      3. Cost Segregation
      4. QIP
      5. Depreciation and Tax Free Income Generation
    3. Meals and Entertainment
      1. Business Meals
    4. Vehicle Expenses
      1. Miles for rental business purposes
    5. Business Use of Home
    6. QBI
      1. Qualifications:
      2. “Trade or Business” (Section 162 Business)
      3. Safe Harbor Test
        1. Separate Books and Records
        2. 250 hours in active participation
        3. Record and documents proving hours
        4. Attach signed statement to tax return stating that safe harbor is met
        5. Qualification
          1. Active Participation Activities
            1. Included - Marketing, negotiating signing leases, collecting rent, supervising contractors or doing repairs… These tasks can be done by someone else. But you need documentation.)
            2. Not Included - Acquisition, Financing, Planning managing or construction of property improvement, studying Reports, travel to and from properties
          2. Log: Property specific, contemporaneous. - Description of Service, Date, hours spent, property included
      4. Triple Net Leases do not qualify
      5. Primary Residence Rental Does Not Qualify
  2. Real Estate Professional
    1. As soon as one has real estate professional both benefit
    2. At least 50% of time in Real Estate Business
      1. Cannot be combined.
      2. Wife can be the REP
    3. 750 Hours (15 hrs a week)
    4. Material Participation - Must meet one to count (500 hrs)
      1. Can be combined for this requirement
  3. Strategies & Revenue Streams
    1. BRRR
    2. Short-Term Rental
      1. Location, Location, Location
      2. Use AirBNB or other room share site and check area. Looking for places with low or no availability, but a reasonable number of properties, but not too many.
      3. Use a research tool - https://datarade.ai/data-categories/airbnb-data
    3. Flipping Properties
      1. Inventory issue
    4. Short-Term Rental Subletting.
    5. Wholesaling and Commission

Key Points

  1. Safe Harbor Test

    1. Separate Books and Records
    2. 250 hours in active participation
    3. Record and documents proving hours
    4. Attach signed statement to tax return stating that safe harbor is met

  2. REP

    Real Estate Professional & Non-Passive Rental

    1. At least 50% of time in Real Estate Business
      1. Cannot be combined.
      2. Wife can be the REP
    2. 750 Hours (15 hrs a week)
    3. Material Participation - Must meet one to count (500 hrs)
      1. Can be combined for this requirement

    Got to chapter 3… tbc