1852 Flatbush Avenue - 2nd Floor
Brooklyn, New York 11210
|Client Update - quarterly newsletter||
Real Estate Taxation & Property Insurance
Ask the expert
CFO Service; and Professional Tax Preparation
and Advisory Service for Real-Estate Owners
We prepare and file Single State and Multiple State Tax Returns for over 1900 Real Estate Clients. Our clients operate as Individuals, LLC, and Corporations (Single Fam., Co-op., Condo., Residential Rental, Mixed use., and Commercial). Clients and their properties are located in NY., NJ., CT., PA., DE., GA., FL., CA., AZ., & NV.
We answer the difficult questions, Solve/Resolve complex Investment challenges with innovative solutions that are perfectly legal, Plan and Prepare their Tax Returns, and Deliver Exceptional Results. We give them Peace-of-mind, and we keep them smiling.
Our network is vast and varied; and the synergies we bring to every client are limitless. Time Management is VERY important to us. Call us when you are READY to do business with us.
Tax Preparation fee you pay is Tax Deductible. In addition, it is an INVESTMENT you make to MINIMIZE your Tax Liability and keep more of your money. PLUS you are in Capable Hands because we are proficient at managing expectations; and we have a Proven and Verifiable Track Record. Therefore, you get Exceptional Results and Peace-of-mind; and you have nothing to lose (Value for Money). Testimonials that we have received during our annual clients survey are overwhelmingly impressive.
The deadline for filing a Corporation Tax Return is March 15; and for an Individual Tax Return is April 15. You can avoid paying a Late Filing Penalty of $220 to the IRS and $100 to the State PER MONTH by filing Extension Form 4868 for Individuals; and Form 7004 for a Corporation on IRS.gov. You can call the IRS (800) 829-1040 from 7am Eastern Standard Time.
When you Sell a Rental Property
This Tax year, 2022 the New Federal Administration has proposed an increase in the Individual Tax Rate from 37% to 39.6%; and an increase in the Federal Capital Gains Tax Rate from 23.8% to 43.4%. Be Prepared. Call us after (as soon as) you sell your Rental Property.
When you Sell a rental property, the combine Federal and State Capital Gains Tax you will pay on that transaction is 45% to 50% because Recapture of depreciation must be added back. The transaction must be handled separately and it will have a lot of work to get done (Credits, Deductions, Exclusions, Recapture of depreciation, Loss deductions carryover from previous years, etc., etc.) from the year you bought the property to the year you sold the property in order to Legally Minimize your OVERALL tax liability when you finally add your Capital Gains from the sale of your Real Estate to the TOTAL of your other incomes (Salary, Social Security, Pension, Gains on the sale of stocks, Dividends, Interest, etc). We are specialized in Real-Estate Taxation. We need Form 1099S and the documents/FILE FOLDERS your Attorney gave you when you BOUGHT the property and when you SOLD the property, etc, etc. You will pay us from the money we saved you (Value for Money). We will do everything in Detail / Systematic / Transparent; and we will put a BIG smile on your face like we have done to hundreds of Real Estate Owners and Investors, including "Property Flippers" for over 30-years.(See Clients Testimonials below).
Real Estate Activities
**#1).Activities we focus on:-Real-Estate Appraisal, Planning, Acquisition(Buy or Like-kind Exchange), Operation, Repossession, Foreclosure, Bankruptcy, and Sale/Disposition.
**#2).Tax Codes we use(Costs Segregations Items):- 61, 108, 109, 110, 162, 167, 168, 179, 195, 199A, 212, 263, 280, 139, 441-446, 453, 460, 469, 704(b), 754, 759, 856, 1006, 1211, 1221, 1231, 1245, 1250, 1841, 3402, 6013, 6662, 6695, etc.); Plus IRS 48 hours of Mandatory Annual Continuing Education. We dont rely on simplistic rules of thumb to solve Real-Estate Tax Problems. Our methodology is meticulous (factually deep and effective).
**#3).Tax Research Companies we use:- Thompson Reuters; Prentice-Hall; WG&L; RIA; CCH, and NBA. They are the best/legendary; and they are use by IRS Auditors. Hence, you are in capable hands with us.
**#4).Properties we are focusing on:-Private Homes; Gated Community Homes; Mixed-use buildings; Apartment Buildings; Commercial/Retail; Industrial; Condos., Co-ops(section 216)., Vacation Homes; Time-Shares; and Airbnb(ABNB). Activities:-Repairs, Remodel, Demolition, Construction, Buying, Selling, Renting, Leasing, Lease-Options, Tax Credits, Deductions, and Exemptions/Exclusions.
**#5).Services we provide:-Planning, Operations, and Management(Tax Planning; Tax Preparation; Advisory; IRS & State Tax Resolution; Natural Disaster Risks Assessments, and Social Pandemic Risks Assessments).
**#6).Our Knowledge of Mortgage:-Loan Origination, Processing, Underwriting, Closing, Warehousing, and Sale of Mortgage to another company. There is also "Bridge Loan"; "Home Equity Loan" ; Home Equity Line of Credit" or 2nd Mortgage; and there is "Reverse Mortgage". Reverse Mortgage is often used by senior citizens to withdraw equity/money from their residence(1-family house). It is different from a Home Equity Loan because usually senior citizens dont have to make repayment unless they default on their maintenance agreement with the bank.
**#7) Our Knowledge of Insurance:- It is expensive to insure a residence/property that is located in a High-Risk Zone or Area in a State that is prone to a Natural Disaster (Hurricane, Fire, Earthquake, Tornado, Volcano and Flood). Insurance Statistics are showing that Home Owners who suffered a Catastrophic Loss were Under-Insured(Insufficient Insurance Coverage); and they suffered the brunt of the loss. Talk to your Insurance Broker/Agent TODAY and get Adequate Insurance Coverage to protect your property and your equity from Climate Change surprises; and get Peace-of-mind.
**#8) Natural Disaster Tax Breaks:- You are qualified for a Tax Deduction if your property(House, Vehicles, and Business) was Affected, Damaged or Destroyed by a Natural Disaster. This includes property that was damaged or destroyed in Federal Declared Disaster Areas, as was experienced by some of our clients in the aftermath of hurricanes:-Ida in 2021; Harvey in 2017; Sandy in 2012; Ike in 2008; Katrina in 2005; Andrew in 1992; and Forest fires/wild fires and Earthquake on the West Coast. Disaster Relief Payments that you received from ALL sources (Your Insurance policy, FEMA, etc.) are Tax-Free/Tax-Exempt (IRC Section 139). However, the IRS and State require that you report and declare ALL payments on your Tax Return in order to deternime if you are qualified for a Tax Break that is based on your gross income. Some of our clients have received a Tax Deduction that reduced their Taxable Income and their Tax liability. Hence, We need the reports that you received from your Insurance Company Adjuster and FEMA to prepare and file your tax return with the IRS & State.
**#9).How to buy your first home:- Go to your Credit Union, Bank or to a Mortgage Company and tell them you want to buy Your First Home and you want a Letter of Pre-qalification or a Letter of Pre-approval from them. Give them the information they want, and take the letter you received from them to a Real Estate Broker. The Broker will appreciate your seriousness and show you houses that are in Your Price Range; and you or your Broker can negotiate with the seller. Happy House Hunting!!
**#10)Gated Commuities:- Buyer Beware!! Presently, almost every little Cubby Hole is calling itself a "Gated Commuinty"; and is giving a bad rap to REAL "Gated Communities" where crime is almost nonexistent. Buying a house in a REAL "Gated Community" or a "Home Owners Association Commmunity" is not for everybody. It is for people who have the same level of tolerence and respect for other peoples rights to quiet enjoyment. Hire a Real-Estate Attorney and be sure you are willing to abide with the Covenants, Conditions, and Restrictions in the Agreement you sign with the HOA Board. Those rules are there for the Safety, Comfort, and Quiet Enjoyment of everybody in that community, including Protection and Preservation of property values. Those rules can be enforced if you overstep them by mistake; and the consequences are costly. This include fines; or returning your money back to you and throwing you out of the community with the police escorting you and the moving trucks that are carrying you belongings. Those Rules pertain to:- Payment of HOA fees; Security(Entrance & Patrol), Pets; Owner Occupied(No Tenant); Garbage/littering; Visitors Restrictions; Noise(Noise Abatement Acts); Public Nuisance; Exterior Maintenance; Number of vehicles allowed; Parking rules; Car Washing/Repairing on the premises; etc. The Police can enforce some HOA Rules because the HOA is located in the Police Precinct, and HOA rules are usually in compliance with State and Local Laws/Ordinances.
**#11) Analyzing a Rental Property as a good Investment:-The Present Rent Roll; Cash Flow; Tax Breaks; Expected future Cash Flow; Appreciation in Market Value; and Savings on Capital Gains Tax when it is sold.
**#12) How to know if a house that you like is a good house:- You are buying the house "AS IS". Therefore, make sure the house doesnt have Asbestos and Molds; and Rodents & Pests in crawl spaces in the house. For $300-$500, pay a Home Inspector to look at the Structure of the house, including the Electrical, Plumbing, Boiler, Hot Water & Cooling system, Roof, Basement, Foundation; and swamp land around the house. The inspector will give you a report OR give you the OK to buy the house. If the Roof, Foundation, Electrical, Plumbing or Heating/Cooling system is in poor condition, get an estimate to replace it from a contractor. Take the estimate with you to the closing so that your Attorney will get the seller to put the money in an Escrow Account for you to replace the damaged or rotten item after you close the deal.That is perfectly legal. DONT take a Discount from the selling price(Sellers Concession). If you take a Discount from the selling price you will end up having TWO mortgages(the Original Mortgage and a 2nd Mortgage to replace the damaged/ROTTEN item).Thats VERY important!!
**#13).How your Interest Rate is determine:- Everybody doesnt get the same interest rate from a mortgage lender. If you are a member of a Credit Union,your Credit Union will give you a rate that is better than a Bank or Mortgage Company rate. When you apply to a lender for a mortgage, the interest rate or APR you will be qualify for is dependent on the size of the risk involved. It is a Combination of SEVEN risk factors:-
#b)Your Credit Score/History.
#c)The amount of money you put for downpayment.
#d)The repayment terms you choose/select.
#e)Your Debt-to-Income ratio.
#f)The Property location.
#g)The ratio of the mortgage/loan to the value of the property (LTV).
**#14). Fixed Interest Rate Vs Variable Interest Rate:- Try to get a Fixed Interest Rate with NO Pre-payment penalty (Your Real Estate Attorney will advise you accordingly). The monthly mortgage payment is more predictable; and later on you can refinance the mortgage and replace it with a new mortgage that has a Lower Interest Rate without you paying a Penalty for giving up the first mortgage.
**#15). Get your own Real Estate Attorney:- Buying your first home is SERIOUS business and you are relatively new in this business. You are buying a house "AS IS". Therefore, get your own Real Estate Attorney to watch your back, even if the Mortgage Company tells you they will provide a FREE Attorney for you. NOTHING in Real Estate is for FREE. I have watched people hold their heads and bawl/weep/cry. They have learned that lesson the HARD WAY; so dont fall for that gimmickery. Be smart! Dont play "Penny Wise and Pound Foolish."
Lets get to the specifics!!
We know your industry ("Industry-specific" knowledge); and we are aware that a high or low tax bracket can affect your tax liability. Your tax returns will be completed Quickly, Efficiently, and Accurately. We will use EVERY regulatory tax loophole, credit, deduction, and exclusion in the new tax laws to reduce or eliminate your tax liability and put a BIG smile on your face. You have a lot of work to get done. Lets start today!!!
Samples of Tax Breaks
Real Estate tax breaks are too numerous to fully discuss here. Her are a few samples:-
#1) First-Time Home Buyers can make early withdraw of up to $10,000 from their TRADITIONAL IRA to make a down payment, or pay the closing cost without incurring a 10% penalty for early withdrawal (example:-If you withdraw $100,000, you will pay a 10% penalty of $9,000 on $90,000).
#2) If you RENT your Private Residence or Vacation Home to a Tenant or a Film/Movie Company for less than 14-days during the year, the rental income you received is NOT taxable (Tax Exempt) - IRC-280A(g).
#3) If you install a Solar Electric/Energy System in your home, you will received a ONE-TIME Federal "Residential Energy Credit" of 26%; and up to $5,000 Energy Tax Credit from NY State. (Example:- If the system cost you $30,000, you will get a FederalTax Credit of $7,800 and NY State Tax Credit of $5,000 on your tax return). Bring/send us the documents you signed with the contractor/company to substantiale your claim/purchase.
#4) If your use Home Heating Oil in your boiler or heating system, you can claim the NY State "Clean Heating Fuel Credit" of up to $0.20 per gallon. (Example:- 1,800 gals per year @ $0.20 = $$360 tax credit).
#5) You can LEGALLY avoid paying NY State Sales tax on home improvement items (Capital Improvement) that you plan to install in your home(Boiler, Windows & Doors, Central Air Condition, New Roof, etc). Ask the Contractor for a "Certificate of Capital Improvement" form. Fill out the form and sign it to waive the sales tax (example, a new boiler for $7,500 x 8.875% sales tax equals $665.63 you can keep in your pocket. Its perfectly legal).
#6) OPERATING EXPENSES:-You are qualified to deduct Annual Operating Expenses for each rental property you own; and you may qualify to deduct a maximum total of up to $25,000 of Operating Loss. Excess loss is carried over to the next tax year.
#7) PROPERTY SALE:- If you Sell your Residence or Rental property, we will save you thousands of dollars in Capital Gains Tax. Bring us the documents that you received at the closing when you purchased the property and when you sell the property.
#8) PROPERTY EXCHANGE:- "Like-kind Exchange" is exchanging your property for another property that has similar characteristics and value. If you no longer like your property, you can exchange it with the owner of a similar property. Example:- a 2-family rental in exchange for another 2-family rental; or a 2-family with a Store Front in exchange for a 2-family with a Store Front, etc. Meet with the owner of the property that you want to receive in the exchange. Have both Attorneys transfer the properties and close the transaction. Give us the documents you received to report the transaction to the IRS & State.
#9) MORTGAGE Non-COMPLIANCE ISSUE:- You MAY postpone paying income tax If your property was on a Forbearance plan and you have successfully completed a Mortgage Modification with a bank or mortgage lender; or you Loss or "Disposed off" your property in Bankruptcy or Foreclosure (Repossession). Give us the documents to support your claim. Lets start today!!
Who are the Owners and Investors: -
1)Investors/"Flippers"(Buy, Fix, and Sell within 12 months)
2) Residential Owners (1 to 4 family house; Vacation homes; Condos., Co-ops., Airbnb(ABNB); Gated Community Home; and Time Shares).
3) Mixed-use or Commercial owners (Apartments Upstairs and Store Fronts Downstairs; Apartment buildings with or without laundry room; Shopping Centers/Malls).
4) Home Builders and Land developers.
What we want from Owners and Investors
1) Your Cell Phone number and E-mail address for quick communication.
2) A paper copy of the last tax return you filed if you are a new client.
3) Paper copy of your Forms W2 wages; and Forms 1099 for Interest and Dividends from your Bank and Brokerage Company.
4) Forms W-2G winnings from casino, State Lottery, Horse race, etc.
5) A list of your job related expenses.
6) If you own a Private Home, Gated Community Home; Vacation Home or Time Share, we need the Mortgage Interest; Real Eatate Tax; School Tax; Town Tax; Community Tax; VillageTax; Sales Tax you paid for Boat and Automobiles; and Home Owners Association(HOA) fee you paid on each property during the year.
7) If you own a Condo or Co-op (Section 216); we need the Mortgage Interest and Real-Estate Tax you paid your Bank; PLUS the Letter/Statement and/or Form 1098 you received from your Condo Board, or Co-op Association that shows the number of shares you own in the Co-op, your per share of Real Estate Tax and Mortgage Interest that you paid in maintenance fees during the year.
8)For each Rental Property you own, we need the Rent you collect from each property(Rent from Tenants and from the City/State); PLUS an Analysis of Expenses you paid to operate/maintain each property during the year.
9) If you sell a Residential or Rental Property, for each property you sold, we need BOTH the Closing Documents that you received from your Attorney when you bought the property; and the Closing Documents that you received when you sold the property.
10) A copy of your Drivers license or State ID; AND a copy of your spouse Drivers License or State ID.(Starting in 2016, the IRS required the information be included on ALL tax returns to help combat Identity theft).-IRS (800) 829-1040 from 7am Eastern Standard Time (EST).
11)Give us those letters you received from the IRS and States, including the letter you received from the IRS with the IP PIN number that was assigned to you to put on your tax return(Identity Protection Personal Identification Number).
12) Social Security card and Birth Certificate for each dependent you are claiming; and the information from the Day Care Center or Baby-sitter you paid.
13) Your Credit Card or Bank Account Information to pay for the service.
Real-Estate Related Education and Training.
*MS Taxation; and IRS Enrolled Agent - (1989 to present).
*IRS 48 hours of Mandatory Annual Continuing Education.
*Licensed Insurance Broker - (Property & Casualty).
*Real-Estate Salesperson and Broker certificates - (Pohs Institute, N.Y).
*Real-Estate Employment - (Century-21, Greenfield).
*Real-Estate Annual Continuing Education - (NYU and Pohs Institute).
*Mortgage Underwriting & Banking Certificates - (Mortgage Bankers Association of America).
An employed woman, age 30 gave up her apartment(she is no longer paying rent and utilities) and moved in with her employed boyfriend, age 35, in his house. She refused to help him pay the bills. She told him her name is not on the mortgage and she has no stake/benefit in the equity in the house. She told him if he wants her to pay he must give her a contract that states:-"In the event of a break-up, he will give her all the money she had given him towards paying his mortgage". He refused to give her a contract on the grounds that she had paid her landlords mortgage for 5-years with over $60,000 in rent; and she didnt received money back when she gave up her apartment to live with him. Essentially, she wants to live with him for free and save her money. He thinks he will be better off living by himself. Is she right? Is he right? Is she taking her boyfriends kindness for stupidity?
1) "I sold my 16-family building in June 2021 and my Attorney told me I would have to pay Capital Gains Tax to the IRS & NY State. I was shopping around for a capable person to help me and I contacted Barry. I was impressed with his experience and the proofs he showed me. He wasted no time making me talk to 3 of his clients who have been in a similar situation like myself. I finally said, lets do it!! The result was just like we discussed and I paid the fee from the money he saved me".-Dimitri, E. (Coney Island Ave, Brooklyn, NY)
2) "In February 2021, I sold my Rental Property for $2.8mil. I bought it 20 years ago for $450,000 and I made improvements. Clem saved me $375,000 in capital gains tax. I am delighted. This was more than I expected. I wanted result and I was ready to pay a portion of the savings for it. Thanks Clem!!"-Slavika, J. (Kings Highway, Brooklyn, NY).
3) "Mr. Barry, thanks for overseeing the operations and maintenance of my buildings in Brooklyn, and filing my tax returns on time. Great job!!" - K. Szablewski (Gdansk, Poland).
4) "I was getting ready to retire and relocate to another state. In 2020, I sold both my Private Residence and Rental Property; and I bought a Private Residence in another state in 2020. Those transactions took a toll on my energy and my focus. Clem was able to help me analyze each transaction, prepare my tax returns and save me over $150K in taxes. His fee came from the savings he provided for me, and it was far less than what I paid those Realtors"- Marissa, W. (Hempstead, NY).
5) "Your article on Real Estate Taxation is excellent. I have read bits and pieces of the subject in magazines, brochures, and handouts at seminars, but this is the most comprehensive article I have read on the subject. The answers you gave were well researched." -Jan Davidson, General Contractor (Beverly Hills, CA).
6) "I used to live in New York and travel to my clients in New Jersey and Connecticut. I rented out my residence in New York and relocated to another residence I had in Georgia. I sold my residence in Georgia and relocated to California. Finally, I sold my residence in New York. Barrys tax planning advice saved me $18,000 in prepayment penalties, $30,000 in sellers concessions, and $69,860 in capital gains tax. Barry has been preparing my tax returns and advising me for 20 years. I could not have chosen a better person to look after my interests." - Sylvia Fortune, District Sales Manager (Los Angeles, California).
7) "We flip property (real estate) for a living in NY, PA, FL and GA. The mistake we made was reporting income from the sale of those properties as capital gains. Barry amended those tax returns and got us back thousands of dollars in tax refunds. He has been our tax advisor for several years." - Eva and Allan Hopkin, Real Estate Investors, (Laurelton, New York).
Click here for "Real Estate Tax Deductions"