All Forum Posts by: Benjamin Paul

Thanks for responding Will.

I don't think I made myself clear in the initial post though. I want to keep this house and I'm familiar with ways to get money out of it. My problem is that because I did most of the work myself, I will be forced to take a small amount of depreciation on the property versus the fair market value, 150k/400k. I'm looking for a way to legally take depreciations much closer to the 400k FMV.

Do you have any suggestions?

Thank Jeff. I'm familisr with taking money out of the home and appreciate your comments about finding a good CPA. I'm not familiar with accellerated depreciation and will look into it.

I'm looking for solutions to a working but not ideal business model.

I bought in cash a cheap, run down house in a desirable neighborhood and am preparing to rent it as a single family home. I will have 150k into it and the FMV will be around 400. The people that rent around here are high quality and the rent should cover expenses without any problems. I'd like to take money out from the bank on a low interest, 30yr fixed rate mortgage and buy another cheap place to fix while seeing if landlording is a good fit for me.

Initially I intended to flip the house after living here for two years (I have lived here full time for two) but I love this house and do not want to part with it in exchange for other like kind property. However, the idea that i will only be able to depreciate a small percentage of the houses FMV (because I completed most of the work myself) gnaws at me.

Is there a way I can legally gain the FMV I have created at this property without losing it? My father has a 401k and is open to diversifying into real estate.

Does my low income tax rate mean that the depreciation I may not be able to apply to this place is water under the bridge?

I'm looking for solutions to a working but not ideal business model.

I bought in cash a cheap, run down house in a desirable neighborhood and am preparing to rent it as a single family home. I will have 150k into it and the FMV will be around 400. The people that rent around here are high quality and the rent should cover expenses without any problems. I'd like to take money out from the bank on a low interest, 30yr fixed rate mortgage and buy another cheap place to fix while seeing if landlording is a good fit for me.

Initially I intended to flip the house after living here for two years (I have lived here full time for two) but I love this house and do not want to part with it in exchange for other like kind property. However, the idea that i will only be able to depreciate a small percentage of the houses FMV (because I completed most of the work myself) gnaws at me.

Is there a way I can legally gain the FMV I have created at this property without losing it? My father has a 401k and is open to diversifying into real estate.

Does my low income tax rate mean that the depreciation I may not be able to apply to this place is water under the bridge?

I'm looking for solutions to a working but not ideal business model.

I bought in cash a cheap, run down house in a desirable neighborhood and am preparing to rent it as a single family home. I will have 150k into it and the FMV will be around 400. The people that rent around here are high quality and the rent should cover expenses without any problems. I'd like to take money out from the bank on a low interest, 30yr fixed rate mortgage and buy another cheap place to fix while seeing if landlording is a good fit for me.

Initially I intended to flip the house after living here for two years (I have lived here full time for two) but I love this house and do not want to part with it in exchange for other like kind property. However, the idea that i will only be able to depreciate a small percentage of the houses FMV (because I completed most of the work myself) gnaws at me.

Is there a way I can legally gain the FMV I have created at this property without losing it? My father has a 401k and is open to diversifying into real estate.

Does my low income tax rate mean that the depreciation I may not be able to apply to this place is water under the bridge?

 Thanks for replying. Im fqmiliar with thr lesser of cost to fmv but it seems like there would be a way to work around that creatively using corporations or financing...

I'm renovating a large, single damily home in a rural area with high demand for rentals. I have liced in the home 2 years and initially planned to sell tax free via section 121.

Now im considering renting the home for two years before deciding to sell or not. The issue is that I would like to rent it as three units (which it can be easily equipped for).

Will having it rezoned for three units (which is simple) and then renting them for two years affect my section 121 if i decide to sell at that time?

Second issue ia that I bought this place for 70k, but 40k into it, including 95% of the labor, and it will be valued around 400k as a finished single family. 

If i decise to rent it out how can I raise my cost basis to reflect the value and use depreciation to offset the high rents? Is there a creative or standard solution to this situation?

I'm considering that but like the idea of cash flowing this property that will be recently updated. What's your reasoning @dan.m?

I bought a single family two years ago for 70k with the intention to live in flip.

In the process of renovating I realized it could become a three unit and began reading about the tax benefits of rental real estate and depreciation. 

After repair and conversion the property with be worth about 325k in todays market and rent for between 3 and 4k per month. However i have done most of the work myself and will have a cost basis of less than 150k (of which one third will be land).

i would love to have this as a rental but fear the numbers will not be worth the taxes caused by the low depreciation I have available vs the fair market value (though my income is under 40k). Especially as I could sell outright and pay no tax through the primary residence exemption.

Is there a way to reset the cost basis? Sale to another entity and finance? Cost segregation? Front load depreciation and then 1031 exchange?