All Forum Posts by: Austin Hendrickson

We are located in downtown Minneapolis and also have a few other offices around MN. I work in the group where we specialize in real estate. I sent you a PM with additional information.

Steve is correct on the home exclusion - you must have had it as your primary for 2 out of the last 5 years to qualify for 100% gain exclusion.

If you bought the house 10 years ago at $243k and have $37,500 in A/D then your adjusted basis in the property is $205,500 (assuming you made no capitalized improvements to the house). If you sell today for $265k your total gain would be $59,500 and $37,500 of that gain would be taxed at the depreciation recapture rates of 25%. The remaining gain of $22k would be taxed at your applicable capital gains rate (most likely at the 15% rate). 

Total tax due would be around $13k barring any other facts.

A 1031 like kind exchange is always an option as well.

Michael is correct. The new repair regs allow any item under $2,500 to be expensed. I would say they are both improvements and should be capitalized. Just be aware there is 50% bonus depreciation available on the new dryer you can take as it is personal property. 

You could always tell them you are planning on transferring the property to your LLC for estate planning purposes and see if they are fine with that (just tell them this before you close on the property!) - I have heard of investors who successfully used this strategy and the banks were fine with it. They will most likely have you personally guarantee the debt as well.

Awesome post. I am a CPA as well and this is super inspiring. Keep up the good work!

I am located in the Twin Cities. There are several real estate meetup groups in the area which are pretty awesome.

Welcome to BP! I would stick with the local market as that is what you are familiar with. Since you are a first time homebuyer you can do an FHA loan with as little as 3.5% down. That's about $7k on a $200k house. Just find a solid rental that cashflows and you should be set.

I would stay away from hard money/flipping etc. since you are a student and do not have much cash reserves. If you want additional info just shoot me a PM as I went through the home buying process in Minneapolis last November.

CPA in Minneapolis. Grew up doing concrete and various other construction related jobs. Definitely an interesting topic and lets people know that most real estate investors have day jobs as well!

General rule is to never have real estate in a Corp although there are some exceptions with investors who flip due to tax rates etc. One big reason is that if there is a distribution out of the S-Corp it is treated as coming at FMV and not basis as is the case in an LLC taxed as a Partnership. I could go into a lot more depth here but bottom line is that I would definitely consult a CPA who can go over things you might not think about ahead of time. Being proactive saves big dollars in the long run.

"Ok I'll rent the place but I am putting a lock on the door and you can never come in while I live here. I'll do all the repairs myself."