BiggerPockets Money Podcast

402: Tax Day Q&A: Live CPAs Help YOU Owe Less To the IRS

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Apr 17, 2023
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ADVICE

Cash Purchase Tax Benefits

  • Buying a rental property in cash retains most tax benefits except mortgage interest deduction.
  • You still get to claim depreciation and other operating expenses deductions without paying mortgage interest.
INSIGHT

Home Sale Capital Gains Exclusion

  • Living in a primary home 2-out-of-5 years allows exclusion of up to $500,000 from capital gains tax.
  • Renting the home up to 3 years after living there still qualifies for the exclusion, except depreciation recapture.
ADVICE

Material Participation in Partnerships

  • In partnerships owning a short-term rental, both partners usually cannot materially participate equally to claim half depreciation each.
  • Typically, only one managing partner meets the material participation criteria for active management.
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