All Forum Posts by: DA Nguyen

Hi BP,

I know that CA does blended assessment but what I'm trying to understand is how to estimate the 'taxable value' of the new addition. 

For example, let's say:

- the house is worth 2,000 sqft @ $500 / sqft = $1,000,000

- You add another 2,000sqft @ $200 / sqft cost = $400,000 total cost. 

- similar 4,000 sqft houses are sold for $1,800,000.

So would the taxable value of the new addition be $400,000 or $800,000? I think it's the former since land is already factored into the existing assessment, but I just want to confirm.

Hi all

Already emailed the Assessor’s Office but thought I would post here in case anyone has first hands experience.

I’m considering adding on a second story to our house. I know that in CA only new improvements would be assessed and we don’t plan on making major changes to the first floor besides perhaps knocking down two interior walls to create an open floor plan. But a second story addition involves significant structural reinforcement and MEP updates to the existing structure.

Two things I’m unsure about are:

1. Would this trigger a reassessment of the entire property?

2. If not, will the cost approach likely be used? Specifically let’s say the full economic cost is 350$/sqft but houses are being sold for 700$/sqft, the addition would still only be assessed on the $350/sqft basis?

Hi BP,

We're looking to add a second story to our existing ranch primary residence in the Rose Garden. Looking for recommendation of contractors with experience in this area. 

Thanks everyone!

@Avery Carl

How do STR in the area perform during a recession?

I'm looking to withdraw a small amount out of my HELOC to invest in a few crowdfunding deals. I believe income from crowdfunding deals (regardless of whether it's debt, preferred equity or equity) is considered passive income. So does that mean that I can deduct the interest on my HELOC against income from these deals? As opposed to, the interest being considered investment interest and I have to itemize?

==

Investments on the EQUITYMULTIPLE platform (and on many investing platforms) are structured as "pass-through entities" (specifically, we establish a distinct LLC for each investment on the platform). Since the earnings from these pass-throughs is classified as passive, it is taxed separately from regular investment income (portfolio income). This has three implications:

1. Income from these investments is taxed at your ordinary marginal tax rate.
2. Any losses can be used to offset other passive (and only passive) income, thereby lowering your overall tax liability. Conversely, portfolio losses cannot offset passive gains/income, and vice versa.
3. Profits from passive activity is not subject to self-employment tax.

Thanks @Nicholas Aiola

To clarify point 3 and 4. Even though 300k will be used to add space that will be 100% used for rental, I still can only allocate 30% for interest expenses and depreciation? 

@Nicholas Aiola

Thanks so much for offering your expertise!

I currently own my primary residence outright (no mortgage). I want to take out a HELOC to expand my house (half addition, half attached granny flat). Let's say it costs 300k. The entire new space (30% of new total square footage) will be used for rental. Just want to confirm my understanding of tax treatment:

1. The 300k construction cost gets added to the home basis

2. I can deduct 30% of utilities, gardening expenses, property tax, etc. against rental income of the new space

3. I can deduct the HELOC interest against rental income of the new space (in Schedule E due to the tracing rule - I wouldn't have to itemize and can still take the standard exemption)

4. I can deduct 30% of the total building value as depreciation against rental income of the new space.