All Forum Posts by: Barry Robbins

Thanks Dave, I do believe your explanation was more accurate and also augmented my explanation. I had inaccurately stated that on paper the depreciation makes it look like you took a net loss when you really took a net gain when this is not always the case. When you say you can "save them for next year and try again", do you mean by attempting to adjust your gross income to meet the requirements? If so, do the previous years combine to give you the total benefits that you would have received had you been eligible from the get go? Thanks.

Hey Josh, to answer your question in more depth, you are allowed to depreciate your building (not the land) over a 27.5 year period. The advantage of this is that on paper it makes it so you look like you took a net loss when you really (hopefully) took a net gain. The IRS will give you a portion of your losses back. Lets say you make a net income of $2400 a year and your depreciation is $100,000 / 27.5 = $3636. It actually looks like you lost $1236 that year. The IRS will you give you back a nice chunk of this. If you start to make over $100,000 from your job and you are a part-time real estate investor, benefits like these will start to go away and they will go away completely at $150,000. However, those numbers are based on your "modified adjusted gross income" so if you contribute to your 401k or pre-tax medical plan it will look like you make less money.

Hi Everyone! I am a Network Engineer interested in real estate and business in general. I have found those topics fascinating ever since reading Rich Dad Poor Dad by Robert Kiyosaki about 2 years ago. My next order of business is to begin understanding what a good deal looks like. My goal is to look at 100 houses with professional guidance in order to understand what makes a great deal. I also am very curious to take a look at fix and flips and determine the kind of work it takes to be successful in this. I am a member of the Denver Athletic Club Real Estate Investors Club and an avid reader of real estate and business information. I've really enjoyed everyone's questions and comments on this forum so far and I look forward to becoming part of this community.