All Forum Posts by: Bill Walston

Great stuff there Mike. Do I detect a bit of Charlie, Randy, and Bob's influence?
:-)

Hi Adam! Sent you a colleague request! I have the UBSM.

I think that your yellow letter campaign will lose some of its effectiveness if you aren't using first class mail. Have you used standard mail for other campaigns?

Do you have to use deprecation as a deduction? For example, if your NOI was 45k, and you paid 39k in interest (500k loan at 8% for 30yrs) and your expenses (prop tax, management fees, etc) were 6k, you'd have zero in taxable income. Is that correct?

Getting your taxable income down to zero without deducting deprecation seems like it'd be better in the long run because you'd pay less deprecation recapture tax when selling. Or am I missing something?

Hi Chad,
Yes, you do have to take depreciation. And, if for some reason you fail to take the depreciation, it doesn't matter to IRS. They will require you to recapture the depreciation that is "allowed or allowable since acquisition."

Dustin is quite right. If you own the property personally there is no write off for your own labor.

I would point out, as well, that an LLC is a disregarded entity as far as IRS is concerned. It may be taxed as a sole-proprietorship, a partnership, or a corporation, depending on its structure. This means that even if your property is in a LLC your personal labor might not be deductible. I'd encourage you to consult with your tax pro before setting up your LLC.

Guess I'll give you the standard atty/acct answer Eddie - it depends :-) What are you receiving in exchange for the transfer? If you "transfer" the property to an existing LLC, the LLC will have to either: 1) pay you cash for the property, 2) issue you an additional ownership interest, or 3) issue you a note. That's what will determine the amount of the gain or loss that you would recognize, if any. If you receive nothing in exchange for the property, the transaction would be considered "donated capital" and the LLC would assume your basis in the property. It would be the LLC that will recognize the gain or loss when it disposes of the property.

Hope this is some help.

Hi Buddy,

Have you considered posting a craigslist ad? I've had good luck with that when I needed someone to put out signs or show a property.

But at times, semantics can be important :-) I was merely pointing out that a reason your original accountant may have had a problem with your depreciation calculation could have been because you were referring to it as something that is no longer allowed by the tax code. I am quite familiar with cost segregation,(what you are calling "component depreciation"). I use it myself, and strongly advocate that my students/clients do the same.
Regards!

I've always had better response with a local number. I'm a big fan of SKYPE. You can get a local number pretty much anywhere in the states, so I get one for the area where I'm investing. They run about $3/month and you can cancel them at anytime. I usually just forward the number to my cell, but I can direct it to SKYPE voice mail if I don't want to be bothered.

I'd encourage you to speak with your tax pro sooner rather than later, especially if you are going to do several flips. If you do this in your name individually not only will it be subject to ordinary income tax but also to self-employment tax. If you choose to use a LLC you need to make certain that it's not treated as a disregarded entity by the IRS. If it is, the income will pass to your individual return and would still be subject to the self-employment tax.