All Forum Posts by: Bob Norton

@Garth Aaron Presgrave Welcome to the neighborhood.  I recommend that you contact @Tami DuBose when you get there.  She can introduce you to the local investor groups. 

@Collin Argue Military personnel are in a special category for resident status, so these comments specifically apply to active military.  

For 2021, you will file as a part-year resident of Wisconsin and Florida.  As active military, you will be considered a resident of the state that you register with the military, so make sure you take this step.  Also, once you are deployed outside of your resident state, you no longer pay taxes in that state and most states do not tax your military income while deployed.  

Where moving your residency will help you is when you purchase rental property, as this income is not exempt from state taxes while deployed in the military.  As a Wisconsin resident deployed to Florida, Wisconsin will most likely want to tax you on rentals you own outside of Wisconsin and give you a credit for taxes paid to the other state.  Since Florida does not have individual income taxes, you'd be paying Wisconsin taxes on Florida income.  By changing your residency to Florida, this situation will not occur.  If you own rental properties in Wisconsin, then Wisconsin will still get income tax from your rental income in that state.

As you move around the country and acquire rentals in different areas, being active military and a resident of Florida will mean that you only pay income taxes on your rentals located in income taxable states.  

@Wilson Pereira Your WY LLC will file a partnership return (1065) and it will also have to file a state return in NC for that rental property. WY and FL don't require income tax returns for partnerships. You will receive a K-1 from your WY LLC that you will report on your personal 1040. You will also have to file a NC tax return for the income earned by the NC rental that was reported to NC on your WY LLC tax return.

You have setup a complicated structure for your rentals.  So, you should seek a tax advisor that is familiar with multi-state, real estate filings.

@Rich Ruelas Financing costs are capitalized and amortized over the life of the loan.

@Nicholas Thompson The biggest risk for buying an LLC is the unreported liabilities. So, you will want to do your due diligence, give yourself enough time for that in the contract, and get strong representations and warranties from the seller. Make sure you retain a seasoned attorney with experience in this area.

I've had clients buy the entities because certain permits or licenses come with the property, which they wanted.  I still gave them the same advice about unknown liabilities.

@Manda Gouvion You won't have to worry about the IRS as long as you report your income and expenses on your tax return.  You could consider discussing your tax questions with a CPA that specializes in real estate taxation.  There are several of us in the forum on BP and most of us have clients all over the USA.  Talk to several to see who aligns with your interests the best.

@Jared Schofield If your house is a rental property, then you will pay taxes on your capital gain (which may include your equity).  For example (with very simple numbers), if you bought your rental for $100k and put down $20k, then you have $20k in equity.  If you then sell the house for $100k, you have no taxable gain and you get your equity out.  If you bought your rental for $100k with $20k down and it increased in value to $120k, then you would have $40k in equity in the house.  If you then sold it for $120k, then you would have a $20k taxable gain and you would get your $40k of equity out of the house.

@David M.@Jeremy Strong@Dan Schwartz The big reason for getting an EIN is for the reason that Dan pointed out - to put an EIN on a W-9 and also to put an EIN on a 1099 for any contractors.  I never give out my SSN to anyone (including my doctor, why the hell do they need that?) and use EINs instead.  I have LLCs for all of my rentals and businesses.

@Jeremy Strong If you are just getting an EIN as a sole proprietor, then you just register it under your name.  It doesn't matter which state you live in.  

@Lindel Turner EIDL grants are still available for businesses in low income areas and who can demonstrate at least a 30% reduction in revenue.  If you applied for an EIDL loan previously and meet these criteria, then the SBA will be contacting you to determine eligibility and requesting documentation.  If you do not qualify for the grant, then you can still apply for the EIDL loan.