All Forum Posts by: Adam Rasmussen

Your current CPA may have given you an "introductory" type pricing, knowing that you were ramping things up. If that is the case, he/she should have been much more upfront about that. As long as your CPA files those states correctly it sounds like the only issue is poor communication and not setting expectations properly.

Your tax lady might be saying what you're thinking. You will eventually have to recapture the depreciation when you sell even with the 121 exclusion but simply moving into the building does not mean you need to pay the tax. You might also clarify regarding your state and local taxing authorities. 

Of course every area is different but those charges seem fairly reasonable. Especially given the multiple taxing authorities in Portland. You likely had to file Oregon, Multnomah County, City of Portland, and Schedule R for just the rentals in Portland alone. If your CPA is local to you they were probably unfamiliar with those forms and how to fill things out properly. You might be paying a similar amount but if your CPA isn't knowledgeable (or equipped) to handle those taxing authorities it might be in your best interest to find one who is. 

Colin. First all congrats on the house hack. Such a great way to get the ball rolling with rentals/landlording.

You will claim what they pay you in rent as income on your Schedule E. The utilities should be a wash on your tax return if the tenants are responsible for them. You pick up the money you received from your tenants as rental income and record the same amount as 'utility expense' on the return. 

Don't forget to take a portion of everything else you're responsible for (real estate taxes, mortgage interest, insurance, depreciation, etc) 

I believe you have a good grasp of the concept of basis. But I don't think you need to worry about the long term capital gain unless one partner is taking out more cash than the other. Reason why:

Each partner's basis is equal to 50% of the cash in the bank account + cost basis of the rental (since there is no debt). Since you can't have a negative cash account or negative basis in the rental you will be fine. As I mentioned earlier, if one partner takes out $20k and the other takes out $2k, this is where individuals run into trouble because they are essentially taking the other partner's assets when they have no remaining basis in the partnership. 

Hope that helps.

As a CPA it is definitely more of our DNA to be retroactive since we are constantly reporting what happened the year prior. Last year I had a client wait until October to tell me he donated a piece of land to a church the year before and didn't get an appraisal on it.... We had to scramble to get a local appraiser out there and just barely made the October 15th deadline.

My point is you may want to be more upfront with your CPA about your plans. I like to reach out to my real estate clients just because I love talking about it but not everyone is responsive. If you are willing to spend the money on tax planning, any CPA would be happy to sit down and run some numbers with you. You just need to get on the same page as the CPA. 

Hard to turn down a property that is cash flowing that high. I would think of it in terms of how long it would take to recover the taxes. If the 10% penalty comes out to $3,000 it would only take 3 months to make the money back. Starting month 4 you would come out ahead. 

Especially if this deal were to pass without the funds from the early withdrawal. It seems like a no brainer to just pay the tax and penalty. 

First of all congrats on the new baby! 

From what I've heard since the IRS has no way of knowing you have an additional child, there will be a $500 credit on your 2020 taxes. Not sure how that is supposed to immediately stimulate the economy but that is what I've read. 

Inslee said you can still go outside. You just need to abide by the 6 foot distancing rule. Should be fine for the "Palm Springs of Washington."

He wants us to maintain our sanity by allowing us to go on walks, gardening, etc.

Sorry about that. Not sure why I went in thinking it was a partnership. The comment "at the personal level" only applies if there is separation between you and another entity. Since you are filing the rentals on a Schedule E there is no separation. 

Maybe I am misinterpreting your question. Are you trying to carry over deductions even though you have income to cover the expenses? You have $15k of gross income and $12k of expenses are trying to carry the $12k over?