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All Forum Posts by: Bonnie Griffin Kaake

Bonnie Griffin Kaake has started 5 posts and replied 609 times.

Post: I would like to talk to new investors in commercial property

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

My last post was for @Charlie Hardage, NOT
@Mark H. Porter

Post: What should one use for the home basis value in a CSS?

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Costin I. Just to be clear so you are using the right numbers as your basis. $100K purchase price minus $20K land value = $80K basis for depreciation. This is using a 80/20 ratio for building versus land if that is what the assessor's office lists for your property.

Of course, if you do any renovations on the property to get it ready for rent, those renovations may need to be capitalized (added to your basis) or might be expensed, depending on what is done. 

Post: Tax Purposes - Cost Basis for Depreciation - Appraisal Report VS County Assessment

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Anx Carter Your safest bet is to have your CPA/tax professional determine the land value. They have to report that on the Federal Depreciation Schedule that is required from year to year on your property anyway. Let them take the risk of justifying their numbers to the IRS. This protects you if you are ever audited.

Your depreciation will actually start in the month and year it became "occupied" as a rental, based on the original purchase price, minus land, plus whatever capitalized items you did to prepare the property for rent.

Post: Determining Home Depreciation Value from Tax Assessment

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Steve Wright  You are making this more complex than you need to. Your basis in the property for which you can start depreciating once you put the property up for rent, is calculated like this:

What you paid for the property when you bought it, minus the land value, plus whatever capitalized improvements you made.

TurboTax is not going to cut it as you are moving forward. Get yourself a good real estate savvy CPA, EA or tax accountant. Depending on the size/value of your property, you may also want to consult a tax consultant regarding how to maximize your federal tax benefits and what can be expensed. You may be able to expense some items that are normally thought to need capitalization. Too many people try to save pennies with short-cuts (like using online tax programs) while they are walking over/not seeing hundreds and thousands of dollars they are missing or already missed. This is not just you but large investment companies as well. 

Post: Home Value when converting primary to rental

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Mike Arias  When you convert your property from your personal residence to a rental property, your basis is what you paid for the property originally plus renovations you do in preparing it for rental and minus the land value. Some of your renovations can be expenses and some may need to be capitalized. The ability to begin depreciation starts when the property is available for rent and is being advertised for rent. This is considered "occupied" just as it is when someone is actually paying you rent.

I hope that answers your question. 

Post: I would like to talk to new investors in commercial property

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Mark H. Porter  Your request is not clear. If you are interested in how to decrease your Federal Taxes and increase your cash-flow, I can help with no-cost consulting or studies specific to your property(ies) whether they are small or large and anywhere in the US or US Territories. 

Post: New investor with some wheels in motion

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374
Hi AK, you will find a lot of information to guide you on our investing path. Once you have the building plans and projected budget, you can get a no-cost estimate on the tax benefits you are entitled to. This could give you a little wiggle room for finishing out the construction details when you know how much you will not have to pay in taxes until you sell or 1031 exchange into the next investment. If you will the property upon your death to your heirs, you will never have to pay those tax benefits back. You have a lot of support here and questions are always welcomed.

Post: Retired and investing

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Renata Dias What is your goal once you purchase the land? There are some incredible new tax benefits for ground-up construction and major rehab projects. This is not something that CPAs are aware of yet. Let me know if you want additional information.

Post: First Property - House Hacking Strategy

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Caroline Knight  You are on an exciting new journey! @Dmitriy Fomichenko made a great suggestion...set keyword alerts. You will also want to be sure to keep your eyes and ears open to the possible tax benefits of investing in RE. Why pay more in taxes than you need to pay.

Remember, just because you may consider house-hacking by living in one unit, don't overlook the tax benefits you can be available to you. Don't expect your CPA/tax professional to understand tax strategy with investment real estate. You need a team. 

Post: Finally Ready to start!

Bonnie Griffin Kaake
Posted
  • Real Estate Consultant
  • Denver, CO
  • Posts 621
  • Votes 374

@Ian Stromski You are in a great place to be investing and house-hacking. While you are considering options, be sure to consider the ability to leverage tax benefits available with investment property.

1. Since you will be in NJ for at least 4 years, be sure to take advantage of cost segregation on your multi-family investment purchase.

2. Even if you live in one unit, you can still cost seg the rest of the building and get about 6-8% of what you paid for the property plus any rehab needed, in taxes you will not have to pay up-front.

3. When you move, if you plan to divest of the investment property in NJ, do a 1031 exchange into your next larger investment property to avoid the capital gains and recapture tax. You can also do another cost segregation study on the new depreciable basis after the exchange.

4. Buy a larger multi-family rather than a duplex if you plan to live in one of the units. This will maximize the tax benefits available to you. You can only use the benefits on the portion of the property you are not occupying yourself. A small duplex with only 50% of the property qualifying for cost seg is not as valuable to you as the same amount of money invested in a 4-plex with 75% available for tax benefits of cost segregation.

5. Since the Bonus Depreciation is most likely to go back to 100% for purchases in 2023, 2024 and 2025, the time to buy is now!

6. Be sure you are working with a CPA that understands the value of leveraging the tax benefits on investment property and working with an engineering-based cost segregation company with on-site property reviews and audit defense at no cost if ever needed during your ownership. This is NOT the place to skimp on cheap services without good no-cost on-going consulting when you need help down the road.

Think this through as you are doing. You are headed for a wonderful investment future!