All Forum Posts by: Ben T.

Hi Everyone,

An excellent investment property is hitting the market on March 21—perfect for buy-and-hold investors looking for strong returns and long-term appreciation. LINK TO THE LISTING IS: https://www.redfin.com/TX/Little-Elm/909-Ridge-Dr-75068/home...

Beautiful and move-in ready, this charming, stellar condition, one-story home in the amenity-rich Frisco Ranch neighborhood and outstanding FRISCO ISD is sure to impress! From the superbly landscaped front and backyard to inviting front porch and classic brick exterior to the thoughtfully designed interior, this home has it all. Upon entering, you're welcomed by a formal living and dining space, perfect for entertaining. The spacious open-concept floor plan is filled with natural light and seamlessly connects the living room with its cozy corner fireplace and the chef’s kitchen, which features ample cabinetry, granite countertops and a pantry. The tranquil primary suite is privately tucked away at the back of the home and boasts a spa-like ensuite bath with dual sinks, a soaking tub, a separate shower, and a walk-in closet. Three secondary bedrooms are well-appointed and share a full bath. The spacious, private, fenced backyard features a charming extended patio – perfect for relaxing or entertaining – along with a versatile shed providing ample storage space. The house’s exterior underwent a complete renovation including a new Class 4 roof, new fresh exterior paint throughout including gutters, downspouts, siding, chimney, shed, new window screens & fence. Additional highlights include a 2-car attached garage and a newly installed Top Notch Class 4 Rated Roof with lifetime warranty and solar-powered ventilation for superior wind and hail protection. Don’t miss this exceptional home—schedule your showing today!

Hello - I am planning to sell a rental property and need to find a carpet contractor who can replace the old carpet. 

Does anyone have good referrals or recommendations?

Quote from @Theresa Harris:

Quote from @Ben T.:

Quote from @Theresa Harris:

When are the tenants moving out?  I'd start by having a realtor walk through it with you and determine how much things would cost to do and what it would add to the value of the home.  Then decide what is worth doing and what isn't.  Also remember it will take time to get them done, during which the home is vacant and not on the market.

People shop with their eyes-so many don't care about stuff that is really important (plumbing, electrical, roof, etc).  Do the walls need a good cleaning or a fresh coat of paint?  Hardware (ie cabinet knobs/pulls) if they are dated are easy to replace.  Window coverings (are there blinds that are damaged or mismatched curtains).  Carpet in general can turn off some people, but is it worth replacing?  Is it stained or discoloured or showing wear?

Thank you. Tenant moves out in April 2024. That is the time I will sell. Primary driver that Spring to July are hottest time? This is a suburb with good school district. 

Hope to hear more advice or insight. 

 Do you mean April 2025?  Where I am, the market starts to pick up in late Aprilor early May.

 Yes, April 2025. Sorry was a typo. 

Quote from @Theresa Harris:

When are the tenants moving out?  I'd start by having a realtor walk through it with you and determine how much things would cost to do and what it would add to the value of the home.  Then decide what is worth doing and what isn't.  Also remember it will take time to get them done, during which the home is vacant and not on the market.

People shop with their eyes-so many don't care about stuff that is really important (plumbing, electrical, roof, etc).  Do the walls need a good cleaning or a fresh coat of paint?  Hardware (ie cabinet knobs/pulls) if they are dated are easy to replace.  Window coverings (are there blinds that are damaged or mismatched curtains).  Carpet in general can turn off some people, but is it worth replacing?  Is it stained or discoloured or showing wear?

Thank you. Tenant moves out in April 2024. That is the time I will sell. Primary driver that Spring to July are hottest time? This is a suburb with good school district. 

Hope to hear more advice or insight. 

Hello - I am targeting to get the rental property in the Frisco, TX, area next spring (assuming it is the hottest time to sell?). I've been renting it out since 2017. 1 story, 4 bed 2 bath in Frisco ISD (very good school district). 2012 old and generally in good shape. 

Questions:

1) What items should I focus on renovating if I need to INCREASE the house value?

2) Does old carpet bring the house value down? Currently, it is 12 years old and dusty. Will steam cleaning do to sell?

3) What items should I definitely disregard, i.e., which one does not bring much house value at sale?

4) Any tips to MAXIMIZE house value at sale will be appreciated

Thank you.

Quote from @Michael Plaks:

Quote from @Ben T.:

No, paychecks. If you do it online, you will have to deal with timing of your payments and potentially have a penalty. This is why @Logan Allec was bringing up Form 2210: it allows you to mitigate the penalty based on timing of income and payments, but it is not easy to complete.

 Understood - so say I sell house in Sep-24; then I can adjust my remaining paychecks to catch up to 110% of 2023 tax to avoid tax penalty or I need to start having higher withholdings now?

Quote from @Michael Plaks:

Quote from @Ben T.:

Hello - I will send a rental property this year. LT gain expected of about $200k. My wife and I are above $150k AGI. Can one please explain to me how to avoid underpayment penalty? 

First, we have to assume that you will have a significant taxable capital gain and will NOT be using tax strategies that defer this tax, such as the already mentioned 1031 exchange. If you're not familiar with it, search Bigger Pockets, there's ton of information.

Second, the easiest thing to do is this. Look at your 2023 tax return and see how much was your total tax for 2023, line 24 of Form 1040. Let's say it was $20,000 for 2023. You take 110% of it which is $22,000.

Now, your goal is to have $22,000 withheld from your and your wife's W2s, combined. You can look at your most recent paystubs, take the YTD (year-to-date) withholdings and then prorate it for the rest of 2024. Suppose your calculation shows that you're on track to have $21,000 withheld from your paychecks in 2024.

This is $1,000 short of your goal of $22,000. Then either you or your wife, does not matter who, go to your accounting/payroll department and tell them: I need an extra $1,000 withheld from my paychecks between now and the end of the year. They will have you complete a new W4 form and then do the rest.

After that, you can forget about the underpayment penalty, Form 2210 and other complexities. You will still have to write a check to the IRS next April as you will come short of the total tax due, but without penalties.

Now, if you want to avoid having to write a check to the IRS next April, you have at least two options:
A. prepay the expected tax from your paychecks
B. implement one of the tax strategies that delay this tax
Both options require professional assistance.

Thank you. Can I go on IRS online site and make payments from my bank account to get to 110% of 2023 tax payment? Or it has to be withheld from paychecks? I think it is just easier to use proceeds from rental property sale and pre-pay taxes online this way. 

Quote from @Logan Allec:

There is a safe harbor for you…it’s just 110% of prior year since you’re over the $150,000 AGI.

You can also base on 90% of current year’s taxes to avoid the underpayment of estimated tax penalty.

Keep in mind you can use Form 2210 along with your return to show the IRS how much income you earned by quarter and make your estimated tax payments accordingly.

 Can you please elaborate on this:

Keep in mind you can use Form 2210 along with your return to show the IRS how much income you earned by quarter and make your estimated tax payments accordingly.

Hello - I will send a rental property this year. LT gain expected of about $200k. My wife and I are above $150k AGI. 

Can one please explain to me how to avoid underpayment penalty? I am confused with “quarterly estimated payments”. Wife and I are on W2. Do estimated payments apply to me ie have to make those quarterly? 

Just explanation of what I need to do will help. 

Hello - I have a rental property. If I sell it in 1031 exchange, can I then get another rental, rent it out for 2 year and then make it my primary residence i.e. homestead and that way avoid any depreciation recapture and capital gains?

Also what are 1031 exchange fees?