All Forum Posts by: Chris Clark

late to the convo this might be a dumb question or already addressed but is there now a cap on property taxes up to $10,000?

Is this on a single property or combined total of property taxes paid if own multiple properties?

Thank you!

Brandon Hall will previous rentals be grandfathered in to deduct mortgage interest? If it is will it be lost if you refinance, say from FHA to conventional?

Someone mentioned in a prior post that a benefit to the contractor is that they don't have to pay taxes on cash payments. This is incorrect. Any cash income is still considered taxable by the IRS.  Even illegal income is considered taxable by the IRS. If you don't pay taxes on illegal income, you can be convicted for tax evasion. Has anyone ever heard of Al Capone?

 Are there any exception to this? Say I buy $2000 worth of material from Home Depot. I am not sending them a 1099, or am I? 

I talked to my CPA last winter about the same exact thing. He said if it's a rental property under my personal name, not LLC then I don't need to send out 1099.. Is he correct or I need a new CPA? Its just a PITA to have to a) find people who will not get pissed at us asking for this and B) having to send it out.

Same thing happened to me a few years ago. CPA told me the same thing. Cover yourself and show that you made an attempt to get it. If they refuse to provide the information, then you can longer use them going forward. If you fail to 1099 them and then continue using them, then you can get in trouble.

One way to avoid having to 1099 them is to have them create a corporation. My understanding (and this again is my understanding in that I am NOT a cpa and advise you to seek one out to ask) is that if you write checks to a company, then you are not required to 1099 them.

I also think this same rule applies if they form an LLC. But I think there are some additional rules for LLCs and 1099's. Maybe something like it has to be a single member LLC instead of a partnership LLC?

But that would be one way for you to avoid the IRS dinging you for failing to 1099 someone. And then it would be up to the contractors to decide if they want to risk it or not.

Ultimately, I don't see why its my job to have to 1099 these guys as individuals either. If I was paying them cash, that would be one thing. But if I'm paying by a check, I should not have to 1099 them and it should be the IRS' job to catch them - not mine.

But since thats not how they roll, I really only care about covering myself. So I just go by the rules. And then tell any contractor that refuses to provide the information that they need to create a corp or llc or I can't use them.

Kyle Cortez put it in a trust and inherit it when they past.

@Caleb Heimsoth The limitations would apply to personal only. For real estate investors there would be no limitations.

@Steve Vaughan There are areas of the country where middle and upper-middle class will be affected negatively, where new standard deduction is not going to cut it. In addition, the double standard deduction is a scam, especially for families with children. If you pay close attention to your tax return, you get two deductions (currently) - 1) standard or itemized and 2) personal exemptions. 

Just to put it in perspective, say for a family of four:

 - 2017 standard deduction $12,700 

 - 2017 personal exemption is $4,050 x 4 =  $16,200

So, right now, at a minimum, a family of four gets a deduction of $28,900, which will be replaced by $24,000, as personal exemptions are eliminated.

Moreover, most families who own a house and living in states with income taxes do itemize. Taking a modest house purchased at $300k, mortgage interest is about $10k-$11k / year (relatively new purchases). Add real estate taxes and state income taxes, and for many families itemized deductions are north of $20k.

Without going into many more details:

 - winners: single, and families who do not own a house

 - losers: families who own a house

There are exceptions in the categories above, so this is just a broad generalization.