All Forum Posts by: Bruce D. Kowal
Bruce D. Kowal has started 35 posts and replied 270 times.
Post: Property tax deduction on rental room in my primary for 3 months
- Metro NY + New Bedford
- Posts 273
- Votes 197
Quote from @Eddie L.:
In general practice, do you determine the percentage being 50% just based on the number of bedrooms rented out vs. the number of bedrooms in the house? Does it matter if say the landlord is in a tiny second bedroom while the master bedroom is rented out to a couple with a baby in a 2 bedroom house? Just curious what the generally accepted practice is for proration when it comes to mixed used houses like this.
The key word is reasonable, sensible. Something an IRS Agent could understand. Not overstating in your favor. What is total rentable square feet? How much is available to the tenant. Stuff like that.
Queens, huh? Are you talking about the common practice of renting out basements and attics, too? Send me a PM.
Post: How To Know If You're Investing In A Good/Bad Neighborhood
- Metro NY + New Bedford
- Posts 273
- Votes 197
Quote from @Zackarias Aitchison:
Hey!
If I'm investing out of state, or somewhere I've never been in person before,
Is there some way to figure out if I'm buying in a good or bad part of the city?
I could check google street view, but is there a way I could quantify this in some sort of way to be able to compare apples to apples?
I'm curious to see what some of the solutions are!
Cheers,
I know what I'd do. I'd park my car in front of the property, or close by, and spend the night in the car. Maybe Friday/Sat or Sat/Sun. Some places look quiet, in daytime, but become a whole 'nother world after dark. Just sayin'
Post: "Executing the 1031 Exchange" WSJ article
- Metro NY + New Bedford
- Posts 273
- Votes 197
Sometimes the financial press writers have the ability to write more clearly than CPA's like myself. This is from Friday, March 25 print edition of the Wall Street Journal. A model of clear writing, with an equally lucid explanation of a Delaware Statutory Trust at the end.
Hats off to the authoress Robyn Friedman.
(If you don't have a subscription, or are otherwise blocked from reading it, let me know and I will send you a PDF copy I made).
Post: LLC on own or have a Law firm do them?
- Metro NY + New Bedford
- Posts 273
- Votes 197
Quote from @Frankie Cullinan:
Hello, Question on LLCs. I'm in contract to close on my 3rd long term rental on April 18th. My other two are under LLCs then we have a holding company on top of that. Talking to the law firm that set these up they are saying to purchase the property under my name then switch to an LLC after we close. Cost to have them do this $500. There is also a $155 filing fee payable to the Secretary of State for each LLC. Does this process seem normal and is this something I can do to save the $500 or their a-lot to it and I'm better off paying the $500.00. Plan to buy several more so just trying to get a process in place. Thanks BP
Post: Comingling funds with LLC
- Metro NY + New Bedford
- Posts 273
- Votes 197
Quote from @Account Closed:
Great information - Thank you!!!
Great information - Thank you!!!
May I ask you also about how to help streamline recordkeeping to facilitate soon to come Year End tax?
Im a newbie with 2 rental houses-both properties are in my name and I have individual bank accounts/ with both checking and debit cards to keep my payments and activities separate - I’m saving all receipts to each - This will be my first time doing taxes for my new rentals.
Am I On the right track to facilitate Year End Tax Filing?
The simplest way for now is to set up a spreadsheet. One column for each property. Go through the monthly bank statements with colored highlighters, one color for Property A and another color for Property B. At end of each month enter those expense on the spreadsheet. Columns for Bank A/c #, date and payee. You can do this until you go colorblind.
Post: Comingling funds with LLC
- Metro NY + New Bedford
- Posts 273
- Votes 197
Quote from @Kyle Nigro:
Hi everyone,
This year I purchased my 2nd and 3rd rental properties in the STL area. I had a SFH in the area already, which is under an LLC. I have not created an LLC for the other two properties.
I have been collecting the rent from all my properties and putting it in the LLC account. Is this ok? Should I make a 2nd and 3rd LLC? Or should I put all the properties under the same LLC?
Not sure if there are any disadvantages or concerns I should have about doing this.
Thanks,
Kyle
These are really legal questions as they ultimately deal with liability and the protection afforded by LLC's. I see that you are in NY State. Now, NY has crazy requirements for LLC's, such as the requirement to post a notice in a newspaper when the LLC is formed. Many people ignore this. But if you don't, you lose access and protection of the Courts.
Post: Permits - Yes or No?
- Metro NY + New Bedford
- Posts 273
- Votes 197
I'm next door, in Bayonne. Curious to see what kind of response you will get. Building Dept notorious for being unfriendly, unless they know you.
Post: How much will I pay in capital gain taxes?
- Metro NY + New Bedford
- Posts 273
- Votes 197
Quote from @Dave Foster:
@Eddie L., It does not matter if @Nat Serrano took depreciation or not. depreciation recapture is on all depreciation you did take or could have taken.
@Bruce D. Kowal, Maybe there's something new down the pike you're referring to. But un-recaptured 1250 depreciation as far as I know has always been recaptured at ordinary income rate up to a 25% maximum.
And of course don't forget that you may be subject to state tax and possible surcharge for the Affordable Care Act.
If you go the 1031 route there of course is no tax. All indefinitely deferred tax including gain and depreciation recapture is used to purchase more investment property
It can be confusing. Here's an article about it. I take no credit for writing clearly about this. I tried to simplify it, and made a mess of it.
Thank Goodness for computers . . .
the amount of depreciation claimed on Sec 1250 property that is not recaptured as ordinary income under the Sec1250 recapture rules is unrecaptured section 1250 gain, and is subject to a special capital gain tax rate of 25%
Post: How much will I pay in capital gain taxes?
- Metro NY + New Bedford
- Posts 273
- Votes 197
Quote from @Wayne Brooks:
Quote from @Bruce D. Kowal:
The depreciation recapture rules only apply if you took accelerated depreciation. If someone does this a lot, you may want to choose straight-line depreciation, and avoid messing with recapture. This is termed §1250 gain. Initially you will get greater losses from accelerated, to be sure. Upon recapture, some of that benefit will be taken away. Maybe somewhere, someone has modeled this, with and without. Just something else to mess with your head!
Post: Looking to do partnerships with no experience NYC
- Metro NY + New Bedford
- Posts 273
- Votes 197
Humor: get a job as a Port Authority cop. Or ticket-taker on the LIRR. . . .With those jobs, you will be able to move out, and save money for real estate investing. Don't put the cart before the horse!