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Client Testimonials

My husband and I had to deal with canceled debt from a Deed in Lieu of Foreclosure on a second home with our 2012 taxes. We never had to deal with this type of tax experience and needless to say, we were fearful. Owing taxes on possible additional income was stressful. We searched for CPA’s as well as info about DILs and how Insolvency worked. When we came across Gary’s website, we were impressed. We found his website 8 months prior to tax season. We kept it as a “Favorite” as we knew we would need to contact him for assistance. When it was time to get a CPA, we called Gary. We felt relieved that we actually had someone that not only understood our concerns but was an expert in this area. He walked us through the process and all the time telling us not to worry. When our taxes were completed, you cannot imagine the relief we had when we actually were able to get a refund.

Gary is a dedicated professional and attentive to his clients. We love the virtual office as it is convenient during tax time and he’s fees were fair and affordable when you consider the depth of work accomplished on our taxes!

We’ve already started recommending Gary to others. We are so blessed and grateful for all that Gary did to assist with our taxes.

 

Patty and Tim, Fredericksburg, VA

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Even though Gary enjoys helping colleagues, we no longer provide free consults to other tax preparers. He's happy to consult on an hourly billing basis if our schedule allows.

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Rental Property CPA discusses the 2013 3.8% Investment tax on Rental Profit from Form 8825 and Schedule E | another passive activity rental property issue

Form 8825 CPA rental property Schedule E net investment tax

The 2013 3.8% Net Investment Tax doesn’t affect many rental property owners. (910) 399-2705.

Rental Property CPAs starting fielding questions about the 3.8% Investment tax last year. Why?

  • The Net Investment Income definition includes rent.
  • The tax is new for 2013 and public misconceptions exist.
  • The calculations are what you’d expect; murky.

Net Investment Tax Basics

  • Many Form 8825 and Schedule E rental property Clients won’t be affected.
  • Many rental property Clients can still deduct up to $25,000 of rental property loss under the passive activity exclusion.
  • The tax takes effect only when you reach a modified adjusted gross income (MAGI) of $200,000 for a single person.
  • Rental property owners who meet the real estate professional guideline are not directly affected.
  • The 3.8% Investment Tax may not apply to all of your rental property profit.

“Most rental property owners won’t be affected by the new 3.8% tax. But it may add another layer of complexity for proactive tax positioning.”
– Gary Bode, rental property CPA and Form 8825 tax accountant.

Example

  • Mark is single and earns $175,000 in wages during 2013.
  • He has rental property profit reported on Schedule E of $30,000.
  • This makes his MAGI $205,000 for 2013; $175,000 + $30,000.
  • He pays the 3.8% tax on the smaller of his:
    • Net investment income (the $30,000 of rental property income).
    • MAGI less the threshold for single taxpayers; $205,000 less $200,000 threshold = $5,000.
  • The additional tax is 3.8% x $5,000 = $190.

Rental Property Planning

  • Ask your rental property CPA to extrapolate your 2013 net investment tax based on your 2012 tax figures and known changes for 2013.
  • The net investment tax also affects the sale of rental property.

I’m a rental property CPA because I have rental property in my extended family. So I have to stay current on rental property and passive activity issues. My virtual office allows me serve you wherever your rental property is located. (910) 399-2705.

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