All Forum Posts by: Andres Alava

I am fairly new to the corporate/business world. I have started my S-corp ~1.5yrs ago. I have definitely seen the savings as I had been able to keep a lot more of my money and tax savings under this new corporate scheme. Loving it. 

Just trying to think outside the box here. With the help of the savings from the S-corp (distribution, some personal expenses that I have been able to classify as business expenses, marginal tax bracket savings, paying family members, etc). I was able keep more $$$ and I was able to pay down my mortgage on my primary residency. Is there any value/logic/financial sense in purchasing an investment property in a new LLC (new house where I plan to live with my wife for several years) and rent that new property to ourselves (my spouse and I)? My logic tells me that as a rental property I would be able to use the rental income (paid by my spouse and myself) to obviously pay the rental property mortgage but still take advantage of being able to classify some investment/rental expenses such as the depreciation, HOA fees, maintenance, repairs, mortgage interest, property taxes, etc while at the same time we rent our current home that is 100% paid for and use that rental income to help pay the 'rent' of the new investment property that we are renting to ourselves. I hope I am making sense. Any thoughts on this? Is this even possible?

@Ashish Acharya. I will definitely ask my accountant. I am pretty sure I misunderstood something along the way...I am fairly new to business world in every aspect. I recently started an Scorp ~1.5yrs ago. I have definitely seen the savings as I had been able to keep a lot more of my money and tax savings under this new corporate scheme. I've been trying to educate myself on this topic while at the same time figure out ways on how to put some of that extra money to work.

@Dmitriy Fomichenko. Thank you for your input. It is greatly appreciate it. Sooo much to learn about this whole topic.

Just trying to think outside the box here. With the help of the savings from the S-corp (distribution, some personal expenses that I have been able to classify as business expenses, marginal tax bracket savings, paying family members, etc). I was able keep more $$$ and I was able to pay down my mortgage on my primary residency. Is there any value/logic/financial sense in purchasing an investment property in a new LLC (new house where I plan to live with my wife for several years) and rent that new property to ourselves (my spouse and I)? My logic tells me that as a rental property I would be able to use the rental income (paid by my spouse and myself) to obviously pay the mortgage but still take advantage of being able to classify some investment rental expenses such as the depreciation, HOA fees, maintenance, repairs, mortgage interest, property taxes, etc while at the same time we rent our current home that is 100% paid and use that rental income to help pay the 'rent' of the new investment property that we are renting to ourselves. I hope I am making sense. Any thoughts on this? Is this even possible?

@John Underwood and @Dmitriy Fomichenko

Thank you for the input guys. I believe the self directed ROTH is the way to go for this strategy; however, is it true that assets inside a SDIRA don't take the same benefits/write offs as investment properties outside an IRA. I mean no depreciation/expenses deductions in a SDIRA?

Hello, 

I have heard that it is possible to invest into rental real estate with pre tax dollars. From my own research, it seems that the main two scenarios where this can be done is 1. if you own your own business and attempt to buy the building/office space (under a different entity) and your operational business pays rent to that newly formed entity (LLC/S-corp) that holds the commercial unit and 2. under a self directed IRA that buys the property.

I am wondering if there is a way to buy investment residential rental RE with pretax dollars in any way?

I own my service FL S-corp business grossing ~$160k/yr and netting ~$50K after all expenses including my salary AND a distribution of $40K. I was wondering if instead of taking a distribution (and pay 15.3% tax on that distribution) I can "reinvest" the funds (roughly $90K NET) in residential RE rentals; therefore, investing with pre-tax dollars. Obviously, this implies opening a new LLC that will hold the rental. Also, the newly formed LLC would be funded by my service S-corp (I would be listed as the owner of both entities).

As a side note, I have also read that even in the possible scenario 1 above (buying commercial real estate under another LLC and renting it to your business), the deal cannot be 100% funded with pre-tax money, assuming that this is accurate, I will still be willing to pay the downpayment of my rental investment properties/plan with POST-TAX money but operate the remaining balance with PRE-TAX money. Anyways...bottomline is it even possible to buy residential investment rentals with pretax dollars or not?

Thank you to the community in advance. I am a newby here (at Biggerpockets and the world of real estate investing).