All Forum Posts by: Ayo Odusanya

Good morning Pat!

Thanks for the details! Making sure i understand your points:

1. As long as i am not selling the home, but just transferring over to my LLC, via a quit claims deed, i would not have to pay capital gains tax, AND i can use a 450k amount for baseline depreciation?

2. Baseline depreciation is most likely going to be the best option for me, unless i have put in ~100k in home improvements. 

Thanks again

Thanks for the tidbit Basit. 

Still - the main question remains: Does it make sense to purposefully use the HELOC and pay interest on it, to reduce my taxes, even if i have the cash on hand?

Thanks

Very helpful Christ Thank you!!

Will read the publication but maybe you already know this. If i chose option 1 (FMW), but keep the property under my name, would i still be hit with a capital gains tax bill for the 150k jump on the property value?

Option 1 gives me the most deprecation advantage which is why im curious on this. 

Good morning Bill, 

From what i read i gathered the following:

- transferring it to an LLC before converting it to a rental will bring about a 45-60k tax bill

- But if i keep it under my name and just transfer to a rental, i do not get a 45-60k tax bill. Is this incorrect?

EDIT: I did not realize the capital gains tax hit when converting to an LLC. The property has gained 150K in value. So all above is still accurate, except transferring the current primary to an LLC.

Great, thanks David. Really appreciate the help!

OH wow, did not realize that! Thank you so much; this changes things! 

And this will be in Raleigh NC. 

So assuming i don't pull this into the LLC, then depreciation will be off the purchase price of 295k?

Good morning, 

I'm just about to convert a property from a primary to a rental and i had a few questions regarding deprecation.

I purchased the home in 2019 for 295K, and it is now worth $450K. I plan to do a quit claim deed to transfer the property from me to my LLC and then convert it to a rental property starting next year. Current remaining mortgage is $240K at 2.5%

Few questions regarding this:

1. What is the number i use to estimate by base line depreciation: 295, 450, or 240K

2. How does bonus depreciation work? do i add this to base line depreciation, or does that replace baseline?

Thanks for the help!

Good morning all, 

My first post, so apologies if i do not follow the appropriate etiquette. MY wife and I have a bit of a complex situation that we need advice on. Details below:

Main goal: Reduce our W2 Taxes.

Current Primary Residence

• Town home with 2.5% mortgage
• Under just my name
• We Also have a HELOC available to us with this property.
  • Rate is prime – 0.25%
• Immediate plans with this home is to transfer deed to an LLC, under me and my wife's name and convert to a rental property.

We are about to close on a new Primary Residence.

New Primary Residence

• Single family home with 6.5%
• Approved to Close on the property and mortgage under just my wife’s name.
• We have the downpayment of the home sitting in our savings account with 4.5% APR
• Downpayment is $60K

The questions:

• 1. For Tax savings, Would it be a good idea If we use the HELOC on our current primary mortgage as the down payment for the New home?
  •    The thought is to claim heloc interest as tax deductible
•          The confusion is regarding the heloc being on a property on my name that’s converting to investment, going to a property that’s under                  my wifes name that’s the new primary.
• 2. If the above is indeed a good idea, does the timing of events matter?
• • I.e should we pay the down payment before transferring the deed to the LLC or none of that matters?

Any help on this would be greatly appreciated!