All Forum Posts by: Anthony Conte

@John Acheson

4-unit houses and a condo.

@Michael Plaks

I understand, this net income (all revenue - all expenses, including depreciation).  Thank you for the info.

@Ashish Acharya

I realize now what you were trying to point out. Correct, it doesn't need to be an LLC. But it needs to be income from a pass through entity, right? Sole Proprietor is also a pass through entity. Thanks again for the info.

when will the courts decide on this?  I presume it will be decided in 2018?

With the new tax law, net income that is received via a pass through entity is allowed to have a 20% tax deduction. Essentially 20% of the rental’s net income is tax free.

Most owners have mortgages on their property and most banks do not allow mortgages to be associated with an LLC.

Does anyone have an idea on how to structure it so that the property’s title can stay in the owner’s name (Bank demands this) while still collecting the rental's net income via an LLC? Thanks.

With the new tax law, investors can have have the 1st 20% of Net Income deducted from taxes. Essentially 20% tax free income. To get this 20% tax free income, the income needs to come from a pass through entity such as an LLC. Most banks do not allow rental property’s Title associated with mortgages and HELOCs (rental property as collateral) be in an LLC. Does anyone have any suggestions on how to take advantage of this new tax law without putting the rental real estate’s Title into an LLC? Thanks in Advance!

I currently have a 4 unit complex in Dallas Texas.  A new tenant just moved in and the other tenants have complained about the smell of pot resonating to their units.

I have communicated to the new tenant about other tenants complaining about smoke resonating from her apartment and I pointed out that I advertised the apartment as a smoke free apartment.  The new tenant responded back that she is not smoking and the smell is possibly the smell of her incense candles.

Unfortunately I did not have a 'No Smoking Policy' in the lease.  I have since updated the lease template that I use.  I feel I do not have legal ground to pursue this any further since there is not a 'No Smoking Policy' in the lease.

That being said, are there laws in place that would give a landlord legal ground to pursue this further?  Such as law that protects other tenants being effected by 2nd hand smoke? This is a business and can this property be construed as such and laws protecting other customers (tenants)?

Any feedback is greatly appreciated.

Thanks.

Brie,

Thanks for the reply.

I understand a Security Deposit is not my money.  However since the security deposit was a credit on the purchase of the property (as opposed to providing me with real cash), how does that effect the basis of the property, if at all?

Rental Income is normally income.  However since the pro-rated rent was a credit on the purchase of the property (as opposed to providing me with real cash), how does that effect the basis of the property, if at all?  Do I just declare it as income?

Thanks again.

Anthony

hello all,

Bought a MF in 2014 and now I am filling out the tax forms!

On the HUD-1 settlement form, I received a credit on the purchase of the MF for the security deposits and the rent collected from the beginning of the month (officially purchased on the 5th of the month). In other words, both items (security deposits and the pro-rated rent) were not provided in escrow (i did not receive cash) but was given a credit to the purchase of my property (paid less than the agreed upon purchase price). How does these 2 items affect the basis and the income on my tax forms?

I have received 2 different answers from 2 different tax accountants.

1. Security deposits do not effect the property basis and the pro-rated rent is declared as income for the year.

2. The security deposit increases basis of the property (I get the tax advantage through depreciation but have to lay out cash to cover the security deposit) and the pro-rated rent was a reduction in the cost basis of the property.

What have you all of done in these situations?

Thank you in advance.  Ay responses are appreciated.

Anthony

I am looking into buying a distressed property that is not listed for sale.  Is there a known source to find out if there any debt liens on a particular property?

thanks for your responses.

Following up on my original question regarding the decomposed granite in place of a grass lawn.  I have posed this same question question to 3 different CPAs that prepare taxes and all 3 said this is an expense item and not a capitalized item.

Thanks again.

Anthony

Thanks  @Brandon Gee.

For the Inspections, the house was 'placed into service' in the sense it was already operating as rentals for the prior owner.  But yes the house was 'not placed in service' in the sense I had not owned it and or benefited from the rentals personally when the Inspections took place.  Even though it has been operating as rentals for years, the Inspections took place before I owned it, and that is considered before 'placed into service'?

For the landscaping,  the property has been owned by myself and operating as rentals for over a year at that point.  This property was definitely 'placed into service' when the landscaping took place.  So that aspect should not matter.  But yes what I did may be considered an 'Improvement'.  And if it is considered an 'Improvement', the landscaping should be considered cap-ex and depreciated over 27.5 years?

Thanks again!