All Forum Posts by: Ben Trageser

@Matthew Samson I always reccomend working with an accountant as they will be able to help get everything in line for when you want to grow and figure out the best ways to save. Highly reccomend @Jeff Nash

Make sure you keep records of the expenses as it will most likely add to the cost basis of your property when you go to rent it, increasing depreciation and lessening income.

Seems to be a lot of moving pieces here but I'll start off with the fact that I would need to know more about the situation to thoroughly advise on what is going on.

In a lease purchase agreement, you will not recognize capital gains until the property is actually sold. Until that time, it is considered a rental with Schedule E income. With that being said, a portion of the lease can typically be credited towards the purchase price. 

In regards to the sale of their homes, it depends on who owns the homes, how many years it has been their primary residence etc. as it may be eligible for exclusion from capital gains.

You also have to take into consideration for yourself, depreciation recapture as well as potential capital gains on your rental property. If the rental property was your personal residence within the last 2 out of 5 years, it may be eligible for some exclusion.

Feel free to reach out with more additional information as I'm happy to help as there a lot of moving parts here.

 Happy to help!

Was this property ever rented or just always used for personal use? Based on only the facts and circumstances listed above and if it meets the 2 out of 5 year test, it will be considered under the $250,000 income threshold and non-taxable. The rest of the funds received will be considered a return on your cost basis and non-taxable as well.

@David Yue I am a landlord in NJ and haven’t dealt with it personally but from my knowledge, it’s a huge pain. It also varies town by town. Some towns have rent control in place which only allows you to raise rent a certain percentage every year.

@Khalid Haynes as someone in the NJ area, it is very hard to find something that cashflows greatly. If you do, there will be a lot of interest. DM me if you are interested in talking about towns and reccomendations. Happy to help in any way I can

@Kellyn Cameron It all really depends on the amount of risk that you are willing to take. Also, is there a possibility of finding a better deal down the line? Home buying can be emotional but at the end of the day, the numbers need to work.

I personally wouldn’t feel comfortable buying something that I would break even on. The only time I would feel comfortable doing so is if there are future ways to improve the property to generate more income (adding bedrooms/bathrooms later on).

It all comes down to risk that you want to take but sometimes (at least for me) I try too hard to make the deal work and then I need to take a step back. Hope this helps!

 Agreed here - staining a darker color may be able to hide it well. How much life is left on the floor? Floor looks old so may make sense to stain dark color to hide 

@James Cabral not sure where in NJ you are but currently househacking in West Caldwell. Was looking for two + years. Happy to connect if you want to bounce ideas/thoughts off of.