Real Estate Tax Advisor Blog

Aerial view of a suburban neighborhood with single-family rental homes, symbolizing real estate investing and material participation for tax purposes.
How Material Participation Impacts Real Estate Taxes Material participation is one of the most important tax concepts for real estate investors to understand. This is what determines whether your activity is passive or nonpassive, and if you can use certain losses to offset other income. For many investors, qualifying as […]

Understanding Material Participation for Real Estate Investors

Woman standing at a fork in a forest path, symbolizing the decision between passive and nonpassive real estate activities for tax purposes.
When it comes to taxes, not all income and losses are created equal. One of the most important distinctions real estate investors need to understand is the difference between passive and nonpassive activities. It’s a foundational concept that can either unlock powerful tax savings or leave you sitting on unused […]

Passive vs. Nonpassive Activities for Real Estate Investors: Why It ...

Tax Advisory vs Tax Preparation.
Tax law is complex, no matter your occupation or investments. For real estate investors, the tax landscape can be especially challenging to manage. This is why many investors recruit the help of professionals for tax advisory and tax preparation—but these two activities are not one and the same.

Tax Advisory vs. Tax Preparation

Nicholas Aiola, CPA - 3 Ways to Access Tax-Free Cash for Your Next Deal - Coin Jar
After weeks of digging, you find a home run deal for a new rental property to add to your portfolio. The asking price fits within your budget, the numbers work, and the cash flow is exactly what you’re looking for. There’s only one problem… You need cash to fund the […]

3 Ways to Access Tax-Free Cash for Your Next Real ...

Nicholas Aiola, CPA - Tax Implications of Seller Financing
If you’ve never heard of seller financing — AKA owner financing — in relation to real estate, the good news is it’s an easy concept to understand. The better news is that it could be a tax-advantaged strategy when selling your home. What Is Seller Financing? Seller financing in real […]

Seller Financing Tax Implications

Nicholas Aiola, CPA - Separate Bank Accounts: Don't Mix Business with Pleasure - Piggy Banks
One of the most common missteps I see with beginner investors is using one bank account (likely their personal checking account) for both personal expenses and rental income and expenses. Gasp! Most people don’t see this as a big deal but it could cause a host of problems both currently […]

Do You Need a Separate Bank Account For Your Rental ...

Nicholas Aiola, CPA - Expensing vs. Capitalizing Repair Costs -Tools on Table
I think it’s safe to say the debate on whether to capitalize or expense repair costs applies to every landlord. Show of hands… Who has never done a single repair on any property…ever. Anyone? I didn’t think so. The issue is determining whether the cost of repairs must be capitalized […]

Expensing vs. Capitalizing: A Guide To Categorizing Home Repairs and ...

Nicholas Aiola, CPA - Are You a Real Estate Professional? - Jumping Architect
I played baseball my entire childhood, all the way through high school. I enjoyed it and was fairly good at it, but I didn’t devote most of my time to it. Spoiler alert – I did not make it to the MLB as a professional baseball player. While there is […]

How To Qualify as a Real Estate Professional

Nicholas Aiola, CPA - Can You Deduct Your Rental Losses - Home
Normally, it’s not good news when you hear the word “losses” in connection with your business. Rental losses, however, can be a good thing. Keep in mind – we’re talking about rental tax losses, not rental cash flow losses. It is possible to generate positive cash flow from your rentals […]

Rental Losses – How Much Can Be Deducted?

Nicholas Aiola, CPA - A Real Estate Investor's Guide to Active vs. Passive Income - Arrows Road Sign
The goal of every investor is to generate more income than expenses incurred. As long as cash inflows exceed cash outflows, you’re happy – I mean, income is income, right? We’re dealing with two separate classes of income here – active and passive. There are major differences between the two […]

Active vs. Passive Real Estate Investing Guide

Nicholas Aiola, CPA - Can You Exclude Rental Income From Your Tax Return - House Split 4
We already know that owning rental property is a tax-friendly investment. Let’s take it one step further… What if your rental income isn’t taxed at all? I know what you might be thinking – income that doesn’t have to be reported on your tax return? Surely, you can’t be serious. […]

Can You Exclude Rental Income From Your Tax Return?

Nicholas Aiola, CPA - How to Avoid Taxes When Selling Your Home - Brick House
How would you like to pay no (or less) tax on the sale of your home, even if it appreciated in value? Whether you’re making a move for work, starting a family and needing to upsize, empty nesters looking to downsize, looking for a change in scenery, etc., you can […]

How to Avoid Taxes When Selling Your Home

Nicholas Aiola, CPA - Landlords: This Common Mistake Could Cost You Thousands of Tax Dollars - Keys
You just bought an investment property. It needs some cosmetic work, but nothing major. Whether it’s your first or tenth property, you’re excited. You’re eager to get started on the rehab so you can rent it out and begin earning some cash flow. You start the rehab right away. Two […]

Tax Deductions for Rental Properties: Avoiding a Costly Mistake

Nicholas Aiola, CPA - Depreciation Recapture: The Dark Side of Depreciation - Depreciation Recapture
So now that you know the ins and outs of depreciation and how great it can be for landlords, let’s take a closer look at the downside: depreciation recapture. Disclaimer: For the purposes of this article, we are only going to discuss depreciation recapture in relation to residential real property, […]

How to Avoid Depreciation Recapture on Real Estate

Nicholas Aiola, CPA - Why Depreciation Is a Landlord's Best Friend - Searching 2
Raise your hand if you’ve heard of depreciation before. Now, raise your hand if you can define what depreciation (in relation to accounting) is… Allow me to help – depreciation is the allocation of the cost of an asset over its useful life. It represents the decrease in the asset’s […]

Why Depreciation Is a Landlord’s Best Friend

Nicholas Aiola, CPA - Homeowners vs. Real Estate Investors: What the Changes in the Property Tax and Mortgage Interest Deductions Mean for You - House
Trump’s new tax bill was signed into law, wrapped, and put underneath the tree just in time for Christmas, marking the biggest tax overhaul in over thirty years. If you find yourself in a panic and a bit of a haze trying to figure out what this all means for […]

Property Tax and Mortgage Interest Deduction Limit Explained

Nicholas Aiola, CPA - Tax Deductions for House Hackers: What to Deduct on Your Owner-Occupied Rental Property - Homes 11
Renting out a portion of the home you own and live in––whether it be one or more units in a multi-family property or rooms in a single-family house––is a great way to jump-start your real estate investing portfolio. Owner-occupying, or house hacking, can help you generate some extra cash or […]

House Hacking Tax Deductions: What to Deduct on Your Owner-Occupied ...

Nicholas Aiola, CPA - 4 Steps to Teach Your Kids About Taxes with the "Candy Tax" - Candy Tax
Who doesn’t love trick-or-treating? In my heyday, I would head out into the Halloween night dressed as a ninja, a power ranger, or whatever I thought would help me rake in as much candy as possible. My brother and I used pillowcases––not those amateur plastic pumpkins or little bags––to collect […]

Candy Tax – A Fun Way To Teach Your Kids ...

Nicholas Aiola, CPA - How to Make Sure Your Side Business isn't a Hobby (And Why That Would Be Bad) - Lemonade Stand
I love to draw. As long as I could remember, I would always doodle in class my spare time. The thought of creating and selling artwork on the side has crossed my mind multiple times, and I was always faced with the same questions: How much time would I put into […]

Hobby Income vs Business Income: How Does the IRS Classify ...