Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here
Pick markets, find deals, analyze and manage properties. Try BiggerPockets PRO.
x
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Cindi Anderson

Cindi Anderson has started 2 posts and replied 11 times.

Post: How to calculate 1031 Boot Taxes

Cindi AndersonPosted
  • Investor
  • Sun Valley, ID
  • Posts 16
  • Votes 0

@Dave Foster  To clarify what you're saying, let me try a slightly different example where most gain is depr recapture.  Property sells for $1.2m (after selling costs) with a $50k capital gain and $200k depreciation recapture, for a total of $250k.   Replacement property $1.1m.  Tax would be on $100k, and is allocated $50k to capital gain and $50k to depr recapture?

For example:  

"Some commenters have suggested making the Section 266 election to capitalize expenses, such as property taxes or investment expenses that formerly would be miscellaneous itemized deductions subject to the 2% of adjusted gross income floor, that otherwise wouldn't be tax deductible under the Tax Cuts and Jobs Act.

This strategy won't work. Under Treasury Regulations Section 1.266-1(b)(1), only expenses that would otherwise be tax deductible may be capitalized using the election."

I've seen it dozens of times now, in articles from mainstream money magazines to tax advisor's websites, and the IRS pubs I've read seem to support it (although some pubs haven't been updated yet to reflect TCJA).  The discussion often is written about vacant land, but seems it would also apply to an investment property that is for sale and not actively being rented.  They say these investment expenses used to be deductible over a 2.5% floor, or could be elected to be capitalized and added to basis.  But now that they are not deductible, they are also not able to be added to basis.  I would love to be wrong so if you disagree can you point me to a source?     

If I'm understanding how the new tax laws affect RE investors, I'm surprised there's not more talk about this. It seems that unless you qualify as a "rental property" (currently or actively trying to rent), then no expenses other than property tax and interest are deductible or even able to be added to your cost basis. So no deduction (or reduction of eventual gain) for HOA dues, landscaping, utilities, insurance, attorney's fees, maintenance and repairs, etc.

It seems that this also applies to any maintenance and repairs which are done to sell a property, but I'm not 100% sure about that.  Maybe people in the "business" of flipping still can?   

Is it possible people just haven't figured this out yet because it hasn't been publicized?  Would love to hear what you all think about these changes.

Post: Need to know the nuts and bolts of seller financing

Cindi AndersonPosted
  • Investor
  • Sun Valley, ID
  • Posts 16
  • Votes 0

www.sellerfinanceconsultants.com is recommended above, but all the links on their website are broken, and their two other websites listed on LinkedIn are defunct.  Proceed with caution.

Post: Is it worth buying real estate through your SDIRA?

Cindi AndersonPosted
  • Investor
  • Sun Valley, ID
  • Posts 16
  • Votes 0

I think it's too complicated for typical residential RE. But I did it with a commercial building and I think it is great for that. The building is absolute NNN (I do nothing) with a long lease and I get the funds (equal to 7% of my purpose price) direct deposited into my checking every month. The tenant is huge so there is little default risk. And they are currently in process or doing a complete remodel to the building all at their cost and while still paying me rent.

Post: Rental / Flip / Rental

Cindi AndersonPosted
  • Investor
  • Sun Valley, ID
  • Posts 16
  • Votes 0

thanks. I understand renovation costs are added to basis, but what about carrying costs during the renovation, such as interest, property taxes, utilities and yard service.  Deduct those as if it were still rented?

Post: Rental / Flip / Rental

Cindi AndersonPosted
  • Investor
  • Sun Valley, ID
  • Posts 16
  • Votes 0

Yes, the tax questions I asked in the original post.

Several reasons including:  1) It will take me several months to get plans, bids, permits.  2) It's in a high snow area, not really feasible to start until spring.  Renting during the first winter will help cover my carrying costs.

Post: Rental / Flip / Rental

Cindi AndersonPosted
  • Investor
  • Sun Valley, ID
  • Posts 16
  • Votes 0

I am buying a house.  My plan is to hold it about 2 years and during that time it will start as a rental (appr 6 months), then I will completely rehab it (appr 9-12 months), and then will either sell it or rent it again depending on the market.  

I assume I would start handling it like a rental, expensing and depreciating as a rental.  But then what do I do when I take it off the rental market in order to start rennovations?  Would I stop depreciating and stop deducting carrying costs for that time (interest, taxes, insurance, maintenance), and instead add those to my basis?  Then start treating as a rental again once it's re-rented?  

Thanks!
Cindi

Nice!  But did you make money?  Anywhere I have lived, it is impossible to build a new house for less than buying an existing one.  I can't imagine how you could have made much money on this.