All Forum Posts by: Brett Sorenson

In the end what actually happens in a cash out refi? Your cash position increases with a debit to cash representing the cash received and shown on your bank statement and an offsetting credit to the mortgage liability. Just because there is cash movement doesn't mean it's a taxable event. This portion of the transaction shouldn't hit your income statement which is what I would assume you are looking at regarding your overall taxable income.

I did an owner occupied duplex a couple years back. In the end you are living in the property so from a cashflow perspective it isn't as straight forward. I was living in the unit for 100 a month and that was phenomenal. Now, after moving out, it puts 700 into my pocket while I pay 1,000 to live elsewhere. It is all relative. Find an owner occupied rental and go for it.

What you are asking for is basically building an amortization schedule that can be changed on a whim. I would bet your best bet is to simply build that in excel. I would expect you won't find much canned software available for that because there is no market for that. A seller shouldn't enter into a contract in which their cash flow and payment guarantees can change at anytime. It makes tax planning impossible as well. If I were a seller I wouldn't ever enter into an agreement like that etc.

I am a CPA. My advice would be to make sure your accountant is well versed in the 1031 exchange world. I did years of tax prep and many accountants don't know this part of the tax code very well. It is easy enough to go through but I would just advocate having someone you trust on the front end of the transaction vs scrambling and putting the info together at the end. Transactions like this are worth paying the relatively high costs for a CPA.

I am a CPA. I would advocate for finding a new accountant due to the crappy information you received. Phase outs are simple enough to review and look into..he/she should have given you a better explanation. Regarding 1031 - this is a huge driver of the real estate market and I cannot see this going away. If Trump lowers the capital gains rate this could shake up the need for the 1031 but that is a bridge the market will cross when it comes to fruition. Make the best decision you can given the laws and regulations that are in place..speculating on tax changes is a dangerous situation to put yourself in. 4 years from now a democrat could come into power and completely undo and tax incentives that Trump created etc...you don't want to be stuck with a large tax burden and no options to shelter it.

Good luck Travis. There are many opportunities in St.Paul so that isn't a bad place to start!

Can't do that. If that's what needs to be done it might not be a bad idea to see if Trump lowers cap gain rates and cash out if that happens. Otherwise you are stuck paying some taxes.

Martha, I have been in a similar situation the last two years. Purchased a 3x3 duplex for 175k. It would now sell for 325k. I currently clear 1,000 a month after all expenses etc. I owe 160 on it so it would be a large chunk of change. I am also a CPA so I am well versed in the 1031 exchange potentials. But.....unless you are selling this property and getting into a property that is just as good of a deal as the first I would say hold the property. I know that if I sold and pocketed 100k I wouldn't be able to find anything even comparable to my first 175k purchase. With that being said in my situation it wouldn't make sense. Someone else might say that I could turn my sale into 2 properties. To them I would push back and say that 1 home run is better than stepping in the batters box again and seeing what happens. If it's not broke, don't fix it etc.

I am a CPA and had the identical situation for 2015 and 2016. There are a few nuances to the situation and it gets tricky. 1. I claimed the Income because it's correct and that's the ethical standard I am held to. It does make the return more complicated though and for straight simplicities sake i know people who haven't claimed it because in the end it usually is close to netting to 0. 2. Technically you shouldn't be splitting expenses for common expenses since you get a benefit for them. Even though it could only be 25% of the benefit generally speaking I have seen it practiced that you can't deduct it. The other caveat to all of this is her rent can simply be called a reimbursement or expenses as long as you aren't deducting them on your tax return then. So if she paid you 500 a month and the utility bills for Your unit were 400 in total.. net her payment against those bills and claim the 100 that is on top of that. In the end....there are many different nuances to this in which I can't explain while enjoying a burger for lunch. Consult your cpa and they should have it hammered out for you.

I am a CPA who also "house hacked" the last three years. Yes, report all income and file your taxes correctly. No one likes paying taxes but the income shown will help the you qualify for future mortgages etc. Don't forget you have many deductions including interest, real estate taxes, insurance, utilities, and even your repairs that can now be deducted. Repairs and insurance can't be deducted under a normal personal residence... so there are some silver linings. Good luck...best not to give the Feds any reason to believe you aren't reporting all of your income. Be honest and you have nothing to worry about.