All Forum Posts by: Alex Natanson

So to max out the deduction in low-cost areas  (below 250K) you can flip a house every year declaring you and your wife live separately and returning taxes separately. The only downside is to move every year and pay taxes for two houses at the same time. And don't be stupid - do not rent the vacant house while waiting to sell tax-free

As long as we had responses from professionals. Do spouses have to own a house together to get 500K deduction or just filing jointly is enough?

This is a spherical horse in vacuum or the 'efficient market' which does not exist (hence all last Nobel prizes are about behavioral economics) . The real world is more complex. To get 80% of local price fluctuation you have to add at least next quantitative variables:

- real estate taxes appreciation rate,

- purchasing power (money left after immediate needs - taxes, insurances, food etc)

- net/reverse migratory stream,

- CPI,

- construction of new homes

Not to mention subjective variables:

- confidence (will i have enough money to pay the mortgage tomorrow?)

- expectations (will the equity dive or rise? will the rate spike higher or will it freeze on the level achieved?)

- social status (my third baby is born, now we need to buy a house no matter what)

I would say if it's less than 1-in off and you addressed the cause just repoint the crack and be with it if it's more any decent home inspector will notice the bowing wall and a deal will fell through. 

It's unlikely an inside issue damaged the foundation the way you described it - look outside: downspouts, wells, soil. Almost every project with block foundation i flipped had the same issue - outside water and a feasible solution is to drain the water away. 2K it was just materials and 2 days of excavation service. I did all the rest - I have a vast knowledge and experience in construction. If I would be a contractor I'd charge no less than 7-9K for the job

First of all are we talking about a foundation made of cinderblocks? 

A leaning wall means it's disintegrated in corner/s. Is that so? I doubt you could have missed it while inspecting the property. But bowing might be the case. I had the bowing wall (about 2 in off) 10 ft lenght. Most common treatment is I-beam that pushes the wall back. The quote was 6 I-beams for 5,000. Next question is how old the foundation is? Mine was dated 1954. It means there is a high chance that cinderblocks are saturated with water and that made them weak. In my case I-beam was not viable solution because pushing the wall back without digging the wall first would crumple the wall. Plus it will be hard to flip the house with such a visible issue. 

Please don't repeat what i did. Cause i knew what i was doing. From inside I built a supportive wall out of 4*6 pressure treated wood. Dug out the outside down to footings. The outside of cinderblocks were soft and crumbled. I pushed the wall back, put rebars, and poured concrete. That is it. It took me 3 days and 2K of materials and excavation

In my whole county there are 400 deals a year. In Tampa alone 9K+. In my market I would never paint in blue/red/yellow. Only tan and grey colors. In Tampa i think you will manage to get away without repainting the exterior.

On the contrary my question was about capitalization of indirect cost  - as accounting, mileage etc. - for the next year when the sale will occur. This year I don't have any income to write it off against. 

I'am relatively new to USA flipping business but have a strong experience in other countries with a different kind of accounting/tax systems . I have looked through the search but have not found something corresponding to my case.

For now i don't have W-2 or any other income. 2020 will be the first year i 'am doing my return for 2019. I'am closing on a flip in couple weeks in my personal name. I will have direct and indirect expenses with the house. As i get it the direct expenses (purchase, taxes, insurance, reno costs, etc) are go attached to a flip and deducted while sale takes place id est capitalized with the house. My issue is with indirect costs (mileage, mobile, office etc) in this 2 months to come. Can they be attributed to the house expenses and be deducted in 2019 or they should be wrote off in 2018? The logic and my other experience says yes you can capitalized them as well. But reading IRS publications doesn't shed light so logic and IRS not always come together. 

Please share the actual experience (advice to get a CPA can be omitted)

It really depends. I had drawings for 2000 sq fr for under 2K. They were hand drawn by an old-school unlicensed engineer when wet stamped by a licensed architect. It wouldn't work if the guys didn't know each other for 25 years. Since i knew what i want and i didn't need electrical and plumbing part that worked for me. The other architects wouldn't start for less than 6,500. I can understand - paying for tuition, offices, CAD etc can not land you less than that. But i found the way to save some money for the project