The current economic environment resulting from the COVID-19 pandemic is constantly changing. Numbers shifted dramatically as businesses were shut down and reopened, with many stay-at-home orders still in effect across the country. The second quarter GDP numbers reflected the response to COVID-19 which decreased at an annual rate of 32.9%.
Over the past few months, we’ve had more and more clients ask us about how to take advantage of this changing landscape to get ahead on some of their financial goals. Now, more than ever, is the time to begin making smart investments. If you are considering making a large investment, acquisition, or purchase please let us know so that we can begin discussing the advantages and disadvantages well ahead of time to maximize any benefits that may come from it.
Purchasing an RV
RVs can be used for business and pleasure; however, you have to be careful how you document the time spent in your RV as a dwelling or business space. If it’s used strictly for business purposes, it can fall under the IRS’ home-office deduction as a dedicated workspace or as a corporate location. However, even minimal recreational use doesn’t sit well with the IRS. Documentation is key as well as the business purpose. The regulations and tax benefits surrounding RVs are tricky, so don’t hesitate to consult with us prior to making a move to purchase a motorhome.
Investing in a Beach House for Family Time or Rental Income
Investing in a rental property in a great vacation spot can generate cash income that also provides free accommodation during your much-needed vacation. When used as a rental property, owners can write off business-related expenses such as mortgage interest, insurance, property taxes and much more. The value of the real estate usually increases in value providing deferred gains, some of which will be long-term capital gain. To maximize your tax benefits, you will want to avoid having the property classified as a vacation home. The rules are complex, so call us if you’re contemplating this sort of investment.
Acquiring a business
If you’re contemplating acquiring a business during the current COVID-19 pandemic, preparation and practical thinking is key. Many business owners are now looking to sell their businesses during this period of economic uncertainty. When looking at a potential business acquisition, you want to identify key performance metrics both before and after the pandemic has passed. The metrics change depending upon whether you are looking at a strategic investment versus a platform or stand-alone operation. Learning how to navigate during these uncertain times is crucial. And of course, entity and deal structure are key to any tax savings. If you have any questions, or need some guidance with buying a business, please reach out to us.