All Forum Posts by: Bruce D. Kowal

Quote from @Adam Martin:

I think doomed may be a bit extreme here.  People will always need a place to live and while past performance doesn't guarantee future results rental rates and home values have gone up and to the right over the long haul. Over time rents will continue to rise and will increase profit margins.  Make sure you are investing in an area people want to live and employers want to invest and you should be fine.  My real worry isn't about rising rates of homes, that just means my other ones are increasing in value as well as my net worth.  My real concern is the skyrocketing interest rates which in my opinion is the biggest threat to real estate right now.  I don't mind paying a couple hundred extra on the mortgage that is going to equity but it's a tough pill to swallow when it going to the bank in the form of higher interest rates.  

simple  solution landlords just pay cash ..  returns are fine.. its the over reliance on OPM that will make returns go up or down.. when i started lending in 02 for turnkey model which was basically brand new. The reason investors flocked from West coast and east coast high priced markets is they had even cash flow or negative with minimum bank required down payments.. it was only the low priced markets where you could get 50 to 100 a month positive with minimum down or the BRRR strategy which is really just rate and term refit after rehab.. which is what I started my business providing the funding for out of area investors so they could do that strategy..  Prices of assets are going to go up why would we invest in real estate at all if we felt values would never rise.. just to make 200 a month risking 100k or more of your credit  one could buy any number of small business's for those dollars and make 10X 200 a month ..  we buy real estate for tax bene's and someone else paying your house off.. any positive cash flow is simply gravy.. its not appreciation is gravy its cash flow.   But that narrative does not sell rentals in the cash flow market.

One just needs to put a little more down if they want to have money on top of what it takes to run the property or better yet in low priced markets simply buy them in cash then you get a very nice return even in high priced markets.

I bought a house in Costa Rica, using partially money from my 401k through a covid distribution, which meant I escaped the 10% penalty but still am liable for income tax.

I'm 59, and took out approximately $200k.  This house is on the beach and will serve as a retirement home as well as an airbnb rental.

Per my CPA's advice, I was able to deduct all my travel to Costa Rica, and hotels, since this house is within a corporation and I intend mostly at this point in my life to rent via airbnb the house, staying there for about 1 week every 90 days to work, do additional rehab/improvements and catch waves with my surfboard.

My CPA initially calculated a tax obligation of $51k, which I thought was too high.  His explanation was that he "was not equipped" to take all my deductions that year, and instead amortized them over many years.

The next day I sent him an email offering to pay more for his time to sharpen his pencil.   He then came up with an obligation of $24k, much better, but still not where I think it should be..........more like under $10k.

Does anyone have a referral to an professional CPA who deals with Real Estate and is aggressive in coming up with the lowest, legal tax obligation for their clients?    I live in the south bay area of Los Angeles, near the ocean.

Quote from @Eddie L.:

Quote from @HJ Wang:

Quote from @Eddie L.:

Quote from @HJ Wang:

Quote from @Ashish Acharya:

You are doing it wrong. You don't send 1099s for rent to your partner. It is not an expense. 

This is a distribution to a partner and you need to file a partnership return. 

 Oops. i shouldve asked before i send 1099...

 so... has this 1099 been filed with the IRS?

 Unfortunately yes… will it be a problem if I just use schedule E? Since we reported all income and loss

1. Define "partner". Did you set up a business entity such as a LLC or LLP or others? Is there a partnership agreement in place? Is this just a tenancy in common?

2. Should probably file a corrected 1099 showing zero income issued to your "partner".

3. In either case, I think you'll be reporting on schedule e.

 Its tenancy in common. We both reporting on schedule e. I report all income from rent minus expenses minus my distribution to my partner on 1099. She just report 1099 as income and no other expense. We both take 50% of the depreciation of the house. So theoretically, its the same tax as if we do it as partner?

I'm a realtor in California. I recently filed an LLC to save money on self employment taxes by creating an S Corp. The LLC should be done in around 20 days.

I have two transactions that have just closed and a third one that's pending. One of the commissions has already been sent via ACH transfer to my account from my broker but hasn't delivered yet. The second commission check is in the mail on the way to my broker. The third deal that's pending will close in mid April.

I have several questions. The first is if I'm paid these commissions as an individual before my LLC is created is there any way I can pay my LLC and then report that the commissions were paid to my LLC on my taxes?

The second question is can I have my broker delay paying out the commissions until my LLC is created and I can give them the LLC's 1099? Does it matter that the official close date of the deals were before my LLC was created? I've already asked my broker about possibly delaying the payments and I'm waiting to hear back.