All Forum Posts by: Ali Hashemi

This year my AGI was over $150k and therefore passive income loss limitations eliminated my ability write off losses from my rentals. I am not a real estate professional and I don't see that as a viable path at this time.

How do real estate moguls (like DJT) deduct their expenses....they're certainly over the $150k cap and certainly writing off more than the $25k limit. What are they doing?

I have a great deal of expenses: renovations, travel, supplies, legal, marketing etc....these expenses often put me in the loss category on my rentals, but I'm a long term hold investor. I'm not looking for cashflow, I'm seeking long term equity and property value appreciation. Therefore I don't mind the losses, however I want to deduct these losses. 

What legal but creative solutions are there to be able to either a) lower my AGI or b) be able to deduct these losses?

Some thoughts I had:

1) Open another business that doesn't qualify as "passive-income" so that I can write off the expenses?

2) Put the properties in a trust and write off the expenses associated with the trust?

3) Give a gift to a family member each year to lower my AGI? If I give a gift is it tax free on both?

...etc

What are you considering "small MF"? Are you talking sub 5 units or are you talking 6-20 units?

I typically refer to sub-5 units as 'plexes' and small MF as 6-20 units but I know the term MF is used loosely

@Mark Creason thx for the clarification, I knew it was something like that

I'm not sure I understand what you're asking...when you say "Is there anyway to recapture the 100k that was invested back as cash?"...you're already capturing that $100k back in the higher value of the property.

The simple thing to do would be sell for $500k and purchase a $400k 1031 exchange. Keep the $100k but pay taxes on it.

I recently read another article about investing in opportunity zones. You can take the $500k and invest in opportunity zone. After 10yrs you can sell w/o any tax liability (I think). Maybe that's a long term option

Is it just me or does electric look very low...I recommend calling the utilities if you haven't already and verifying annual average

put together a detailed proforma and plug in worst case scenario numbers. If it still looks acceptable, then go for it

My immediate thought is I hope you have a very strong attorney and lease contract. It sounds as though the entire value of the 2nd office building is in the fact that you have a tenant lined up....so locking them into a lease would be the primary constraint.

That being said, why don't they lease from the office building you already own...

Hi @Taylor E. I'm in Indy, started with living in a SFH and renting out spare rooms and now focusing on small multifamily. Welcome, and good luck! Let us know how we can help :)

Originally posted by @Dennis M.:

Originally posted by @Ali Hashemi:

@Dennis M. Wouldn’t the concept of free market mean that rental rates would reflect any/all taxes and therefore cash-flow wouldn’t be impacted regardless of location? I think your fundamental understanding of markets is wrong. If it’s difficult to cash flow it means there’s low demand for rentals.

It’s okay ..You can think that . Hot markets with  high rents / taxes are the first ones to get in hit  when a recession strikes  . People will move to lower their cost of living when money is tight so Do you think the tax man cares about your vacancy or that your rents are reduced by 40%  ? Tell that to all the investors out west where they banked on appreciation . In a crisis your area is essentially under water and hundreds of thousands of people lost it all . Property taxes don’t go down or magically disappear when the economy tanks . It matters where you park your money . There’s lots to consider i realize . I’m just saying getting started with little capital  is harder when nothing in your area meets the 1% rule and fees are autrocious and that’s often in liberal tenant friendly states 

In your reply you bring in a lot of other topics and I don’t have time or interest in addressing them. I encourage you to separate political views from investing and take the emotion out of it. 

I actually agree with @ Cody L.  Tenant friendly areas are the bigger threat. I don’t mind higher taxes because typically the areas are nicer. People knock California for such high taxes but people continue to flock there. A true conservative understands the principles of a free market. For the same reason I pay more for an American made product, i will pay higher taxes if I’m getting more value as well. 

@Dennis M. Wouldn’t the concept of free market mean that rental rates would reflect any/all taxes and therefore cash-flow wouldn’t be impacted regardless of location? I think your fundamental understanding of markets is wrong. If it’s difficult to cash flow it means there’s low demand for rentals.