Anderson Business Advisors Podcast The Tax-Smart Way To Move Real Estate Into A Corporation
In this episode, Anderson attorney Eliot Thomas, Esq., and CPA Barley Bowler tackle a wide-ranging set of listener questions on retirement accounts, real estate strategy, and business tax planning. They explain the key differences between non-recourse and DSCR loans inside a Solo 401(k), and why maintaining non-recourse status is critical to avoiding a devastating unrelated debt financing income hit. They walk through how to properly establish state residency when relocating and cashing out a 401(k), and clarify why donating fully depreciated work trucks to charity won't produce a charitable deduction or avoid recapture. Eliot and Barley also lay out a detailed framework for strategically unwinding a rental portfolio — factoring in passive losses, real estate professional status, and sale timing. They break down the reverse mortgage interest deduction rules for a mixed-use property, explain how insurance proceeds and roof capitalization work after hail damage, and make a strong case for why real estate should always be transferred — never sold — into a disregarded LLC. The episode closes with a warning about Universal Business Organization Trusts, a rarely used entity type that typically surfaces in fraudulent tax schemes and won't generate the refundable NOL investors hope for. Tune in for expert guidance on these and more!
Submit your tax question to taxtuesday@andersonadvisors.com
Highlights/Topics:
0:00 — Intro
8:37 — "I want to change from a Solo 401(k) non-recourse SFR loan to a Debt Service Coverage Ratio (DSCR) loan. Any tax implications or penalties to be aware of, particularly considering I'm 67 years old?" - No tax implications exist as long as both loans remain non-recourse.
14:35 — "I lived in Colorado January through March of 2025 and moved to Arizona in April. I had a small 401(k) that I cashed out in October 2025. Taxes were withheld. I understand I will be required to file two state returns. How will I reconcile the 401(k) for both states?" - Establish Arizona residency first; the 401(k) cash-out is taxed only there.
20:25 — "I have a fleet of work trucks that needs to be replaced. Can I donate the trucks to charity to avoid depreciation recapture? Can the charity then sell the trucks tax-free to fund their operations?" - Fully depreciated trucks yield no charitable deduction and no recapture to avoid.
25:08 — "From a tax perspective, what is the most strategic approach to unwind residential rental property?" - Track passive losses per property and time sales to offset income strategically.
32:33 — "I have a reverse mortgage on a 2-unit property where I rent one of the units. Will I be able to deduct the interest when I sell the property? What are the rules regarding reverse mortgages? Anything I should know after 10 years pass?" - Interest deductibility depends entirely on how the reverse mortgage proceeds were spent.
40:05 — "My rental property sustained hail damage that totaled the roof. I replaced it. Insurance paid for most of the work, but did not cover deductibles or roof depreciation. Can I recover those expenses using Federal and State tax codes? I live in California." - Out-of-pocket roof costs are capitalized and depreciated over 27.5 years.
43:58 — "When setting up a corporate structure to hold real estate assets, is it more tax efficient to sell the property to the corporation or just transfer ownership and declare it as startup capital?" - Transfer as a capital contribution; never sell to your own entity.
50:25 — "Can I sell my failing business/LLC to a Universal Business Organization Trust at 'cost basis'? Since the trust has no 'money/income' yet, I believe it will create a refundable NOL. Is that correct?" - No — the LLC's losses already flow through to your personal return.
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