All Forum Posts by: Jeremy Zindel

Just wondering what the correct way is to handle business overhead expenses for my rental properties when it's time to account for those expenses at tax time? (i.e. cost for business PO box, Quickbooks, miscellaneous office supplies, RE license fees, LLC annual fees, etc.) Do you just divide the costs up evenly between your Schedule E's for each property or is that not how it is supposed to be done?

To further complicate the initial question, how would you handle an expense that had to be capitilized, say a new computer for example. Would you split the total cost up as separate 5-year property depreciation line items on each of your Schedule E's?

I have an appointment to meet with a CPA coming up but I was curious if anyone out there had any input so I can be a little more educated when I go in for that meeting. Thanks!

Thanks Steven. I figured that was the case but I didn't know if I might be able to get by with it since I don't specifically take my charitable contributions as a deduction do to it not making sense for us to itemize.

First off, I know this is a very specific question to my circumstances and I already have an appointment with a CPA to ask this and many other questions but I wanted to get a feel from anyone in the BP community who might have any experience or input on my situation.

Question: Is it possible to deduct charitable contributions on a Schedule E (or on a Schedule C - my wife has a small side business)?

Other relevant info:
- My rentals are held in an LLC which has pass-thru treatment for taxes (no S-corp election).
- My wife and I do not have enough personal expenses to itemize so we take the standard deduction every year.
- My expenses from my rentals, including depreciaiton, have me showing a net loss, but not enough that I have reached the passive activiy loss limit.
- My wife's side business has a net profit.

The idea would be that since we take the standard deduction, it would be nice to find a way to create an additional deduction on our W2 income by redirecting our contributions through one or both of our businesses to either increase my losses on the rentals up to the passive activity loss limit or reduce her profits on her side business.

Obviously this won't help us on our 2013 taxes since I'm just now thinking of this but I'm just wondering if there is any validity to the idea going forward.

Thanks!

I am a huge fan of my ozone machine. It's just a small one, not the big commercial kind but it has worked great for me. I've used it on three properties that had been smoked in prior to me purchasing them and my little ozone machine completely eliminated the odor. I haven't use it to get rid of any pet odors yet. I have one property under contract right now that has a room that has cat urine smell that I will be trying it one when it closes so I'd also be interesteed to here if anyone has had success.

The guy the does maintenance on my properties has a day job working for Servpro so he deals with this stuff all the time. He says the ozone machines will work on light/medium pet odors but if they are bad the smell will still linger. I'd say it is worth a shot if the odor isn't too overpowering.

Good luck!

I believe you would still have the liability protection of the LLC regardless of whose name the financing is in as long as the LLC was listed on title as the owner. That being said, if you are getting a conventional mortgage you are not going to be able to take title in the name of an LLC. That doesn't fly under Fannie/Freddie guidelines. On the other hand if you are working with a small local bank or credit union that would not be an issue.

As far as the taxes go, most small LLCs are set up as "pass-through" tax entities, where the profits and losses of the business pass through to its owner. With that being the case, it is taxed just the same as if it were a sole proprietorship, so there is not necessarily any tax benefit.

I personally did not set up an LLC before I purchased my first property. After many months of analysis paralysis I decided it was time to stop making excuses and take action. After I bought my second property and had it rented out as well I went back and formed and LLC and transfered everything over.

I don't know that there is a right or wrong here, just what you are comfortable with.

I would strongly suggest you consider going with a small local bank or credit union, instead of trying to find something on the internet. Especially if you are considering multifamily. IMO there is no substitute to having a good portfolio lender you can work with when it comes to your long term financing needs for buy and hold. Do some research here on BP to get yourself prepared and make a few calls. You'll be glad you did.

I realize this wasn't a direct answer to the question you were asking but I hope it helps. Good luck!

I did get some insight on the process after I moved this post to another thread (http://www.biggerpockets.com/forums/311/topics/100460-probate-process-in-illinois). Also, I did speak with the county clerk's office but all they would tell me is that the guy's estate had not been probated. I tried asking all kinds of questions about how I might go about getting that done and their answer was always to seek the services of an attorney. Honestly, after all the research I've done I think that paying for an attorney to help the ex get the guys estate through probate is really my only option if I really want to pursue this.

Thank you guys very much for the tips and the link. After reviewing, I think it will be best to get an attorney involved if I really want to pursue this. Just too much complexity for me to want to go it alone. Thanks again!

So I was driving for dollars one day after checking on one of my rentals and I sent a yellow letter to a house that appeared vacant. A lady called me a couple days later and said that she would be more than happy to sell me the property dirt cheap and get it off her hands if I could help her figure out how to do so. In talking with the lady about the circumstances of the property I found out that she is the ex of the owner of the property who passed away back in 2011. They were never married but they had two children together. This property is essentially the only asset the guy had and his only next of kin would be his two children as his parents were never in the picture and he was raised by his grandmother who passed away about two month after he did. I called my county clerk's office and found out that the estate has not been probated so now I'm trying to figure out how to move forward. Since the only heirs appear to be the two children, I assume the property would transfer to them, but since they are both minors their mother would have the power to sell the property. The house is free and clear and the lady has been paying the taxes on the property for that last two years to keep it current. From my research in the Illinois probate process, it seems like you can file the paperwork yourself for small estate valued at less than $100k (which would be the case in this situation) and avoid going through the courts. However, I think having real property makes that more complicated and might require going through the court system and hiring an attorney. An added layer of complexity is that the guy did not have a will which may also necessitate getting a lawyer involved. Help me out BP! Thanks!

So I was driving for dollars one day after checking on one of my rentals and I sent a yellow letter to a house that appeared vacant. A lady called me a couple days later and said that she would be more than happy to sell me the property dirt cheap and get it off her hands if I could help her figure out how to do so. In talking with the lady about the circumstances of the property I found out that she is the ex of the owner of the property who passed away back in 2011. They were never married but they had two children together. This property is essentially the only asset the guy had and his only next of kin would be his two children as his parents were never in the picture and he was raised by his grandmother who passed away about two month after he did. I called my county clerk’s office and found out that the estate has not been probated so now I’m trying to figure out how to move forward. Since the only heirs appear to be the two children, I assume the property would transfer to them, but since they are both minors their mother would have the power to sell the property. The house is free and clear and the lady has been paying the taxes on the property for that last two years to keep it current. From my research in the Illinois probate process, it seems like you can file the paperwork yourself for small estate valued at less than $100k (which would be the case in this situation) and avoid going through the courts. However, I think having real property makes that more complicated and might require going through the court system and hiring an attorney. An added layer of complexity is that the guy did not have a will which may also necessitate getting a lawyer involved. Help me out BP! Thanks!