EP23: Get a Jump Start on Your Taxes Before the End of the Year with Natalie Kolodij
With 2022 drawing to a close, tax season is nearly upon us. This week on the podcast we are joined by our friend, Natalie Kolodij, a Real Estate Tax Strategist who is sharing her expertise with us on what we should be doing to prepare for tax season when it comes to REI.
Natalie is an IRS Enrolled Agent and Real Estate Tax Strategist who has been working exclusively in real estate since 2014. Natalie is highly specialized in her niche and loves helping people get set up with the right strategies to really work on building their wealth in the most effective way they can.
The first thing we cover in this episode is how you can save on taxes by having your rental property transition (temporarily) to a short-term rental property, before turning it into a long-term or mid-term rental. One of the key things with normal rentals, long-term rentals, or even mid-term rentals, is that they're in the same category for taxes called ‘passive income’ to the government, meaning that you don't pay any payroll taxes on it. But a trade-off there is that when a passive activity like a rental creates a loss, you can't always use it, depending on your circumstances. There are certain circumstances where you can, and some circumstances when you can't. So typically, if your annual income is above $100,000, you might not be able to use that loss. It can always offset other passive income, but not your W-2’s or other income types. It's in its own bucket and that is passive loss limit. You don’t lose it, but rather it carries forward into the next year.
Short-term rentals are a unique hybrid area where if you have a short-term rental, where the average stay is 7 days or less, then it can qualify as non-passive. By breaching that nonpassive designation, any losses you create are no longer subject to that income limit and there’s no true cap on that. So with a short-term rental, you can do something like utilize cost segregation, where you push some of your depreciation up to the front end, have a big loss in one year, and be able to fully deduct it against your earnings from your W-2 job (or flipping income or any other types of income). It creates a really great loophole.
In this episode, Natalie shares so many great tips and tricks, just like this, about how to prepare yourself for tax season, find the right accountant for your business, and so much more, in a way to help set you up for a stress-free tax season. She also shares her Year End Tax Prep Checklist for REI with our listeners.
Want to connect with Natalie or find out more about her current client offerings? Shoot her a DM on Instagram or visit her website to learn more!
Thank you for listening, friends! We’ll catch you in the next episode!
Resources
Visit Natalie’s Website
Connect with Natalie on Instagram
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