All Forum Posts by: Bill Walston

@Tim Ivory, 

First, most of this thread has been about a lease and option transaction and you're asking about a lease purchase.  Even though many use these terms interchangeably, there is a difference.  A lease purchase obligates the buyer to purchase of the property.  A lease and option gives the tenant the RIGHT, but not obligation, to purchase.  And no, you would not be able to exercise your right - indefinitely.  There is a specified time limit in the contract during which you may exercise your option/right.  Once that period expires so does your option.  During the option period you have the right to purchase at the contract price - any equity buildup is irrelevant unless it is addressed in the contract. And finally, yes, you can do a "sandwich lease" with an option to buy as long as YOUR lease agreement with the seller gives you the right to sub-let.

Hope this helps.

@John S., @Russell Brazil is correct.  If you traveled to LA but didn't buy a property, as a general rule, the travel expenses are not deductible.  

@Jennifer Bott, a "DRAW" is not reported on the Schedule E.  A "DRAW" is not an expense item - it's money transferred from the business account to the sole-proprietor.

@Raj Tirur, is the debt listed in your personal name or in the name of the LLC? If the debt is in the name of your LLC it should NOT affect your DTI regardless of the tax election of the entity. What most likely is the case, based on the information you shared, is that the debt is in your name even though your LLC holds the properties. If that's the case the debt will affect your DTI. The debt should be offset to some degree by the rental income generated by the rental properties.

@Bram Spiero, @Soh Tanaka is absolutely correct.  If you own the property in your name as an individual and hold it for rental purposes both your income AND expenses are reported on Schedule E of your Form 1040.  

Does anyone know where to find SUBSCRIBED FORUMS now?  Or is that no longer avaliable?  

@Mike A., the Consumer Handbook on Adjustable Rate Mortgages (published by the CFPB) specifically states that a stepped-rate mortgage is NOT an ARM. The cap that you refer to applies, based on my reading of the Act, only to adjustable rate mortgages. While this is not a legal opinion, I'd agree with your MLO.

Joseph, you DO need a tax pro that knows the ins and outs of real estate.  That pro doesn't HAVE to be a CPA.  I have MANY CPA colleagues who know ZIP about real estate transactions and related tax strategies.  That's just not what they do.  On the other hand, I know many good accountants and Enrolled Agents (@Steven Hamilton II being one) in whom I would have complete confidence.  Check with other real estate investors and get referrals.  Interview a few tax pros.  Find someone with whom you're comfortable.  A good tax pro can save you big $$$ :)