Friday Weekly Q&A Call - 07/10/2026 · 🏠 Lower Taxes w/ Ryan

Friday Weekly Q&A Call - 07/10/2026

Here's a summary of the key takeaways from this session:

1031 exchange into a syndication

Standard LLC syndications do not qualify for a 1031 exchange.
The most viable option is a Delaware Statutory Trust (DST).
You must identify a replacement property within 45 days and close within 180 days.
The full value must roll over — equity, allocated debt, and closing proceeds — not just your original down payment.
It must always be investment-to-investment (not primary residence to investment). Like-kind is flexible: commercial-to-residential and vice versa both qualify.

Cost segregation & property improvements

A cost seg study doesn't need to be done in the same year you acquire the property — time it for the year you have the highest taxable income.
Adding improvements after the initial cost seg (e.g. a pool) doesn't require redoing the entire study — they can be added manually to a future return.
Roughly 20–25% of a property can be accelerated via bonus depreciation; the remaining ~80% depreciates over 39 years.
A great rental property hits the trifecta: cash flow, depreciation benefits, and appreciation.
When deciding whether to do the cost seg before or after renovations, doing it after is often more comprehensive, but either can work.

1099s & contractor payments

1099s are due by January 31 for the prior tax year.
Always collect a W-9 before a contractor starts work — don't pay until you have it.
C-corps and S-corps are generally exempt from receiving 1099s.
Payments via credit card or third-party platforms (like Plastic) typically don't require a 1099 — the payment processor handles reporting.
Zelle is treated as a bank transfer, so 1099s generally still apply.
Use track1099.com to file 1099s easily once you have W-9 info.
In theory, you can't deduct contractor expenses without issuing a 1099 — but enforcement is inconsistent. Do it right regardless.

Real estate professional status & material participation

REP status requires 750+ hours across all real estate activities, plus individual property criteria.
Each property also needs 100+ hours (and more than anyone else), or 500+ hours via grouping.
Qualifying activities include: managing properties, coordinating contractors, permitting, research, analyzing financials, and tracking mileage.
REP status hours belong to one spouse — they can't be combined between partners.
You only need to qualify in the year you want to claim the losses — prior years are already locked in.
Long-term rentals can be grouped to reach the 500-hour threshold; STRs are evaluated individually.
Track everything — even your property manager's hours, so you can prove you did more.

Tennessee series LLC & FONCE tax traps

Closing a series LLC in Tennessee triggers a 6.5% state tax on the gain from any prior property sale within that series.
The FONCE exemption applies to families with at least 95% ownership and passive activity — but real estate gains in TN are often not treated as passive.
Options to avoid the 6.5% hit: deed the property to your personal name and hold 12+ months before selling, keep the series active by adding new property, or use a 1031 exchange (defers gain at both federal and state levels).
The 6.5% tax paid may be deductible as an ordinary business expense on your federal return.
Transferring a deed from a series LLC to yourself (same owner) generally does not trigger a due-on-sale clause — but consult an attorney to confirm.
Strategically plan which years you close series to manage when the tax hit occurs.

Mileage tracking

Only about 40% of real estate investors actually track mileage — this is a common missed deduction.
Use an app like MileIQ to log trips automatically; save exports to Google Drive monthly or annually.
If you didn't track, a percentage estimate (e.g. 40% of total miles driven for business) can still be used — but a real log wins in an audit.
Time spent tracking mileage and managing records counts toward your material participation hours.

General mindset

Treat your real estate portfolio like a business, not a side hobby.
Most tax money lost to the IRS isn't from cheating — it's from not knowing the rules or acting too late.
The tax code is full of legal tools — cost segs, 1031s, REP status, bonus depreciation — but they only work if you plan ahead.
Show up, track your hours, collect your W-9s, know your state's quirks, and get on your CPA's calendar before Q4.
The right year matters — timing your deductions to high-income years is where the real leverage is.
If you can prove it, you can defend it. Documentation isn't optional — it's the strategy.

Thank you all for joining!

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Friday Weekly Q&A Call - 07/10/2026