All Forum Posts by: Daniel Murphy

@Mary Jay, You're partially correct.  
Think of it this way.  Here's roughly how your taxes work.  
W2 income, Social security income, stock market income & other misc income is on the "first page" of your 1040. These are all "above the line" & flow into your Adjusted gross income.  
Your rental income is all calculated on a separate schedule, Schedule E most likely.  Easy math, you take in $50,000 of revenue from your rental. You subtract your expenses, mortgage interest, property taxes & depreciation from your income, and this is your net rental income.  For easy math, let's just say that's $25k.  

This $25k then goes back onto the first page of your 1040, "above the line".  

Again, over simplifying but let's say you have $100k of income from W2 work, & $25k net from your rental. You have $125k of total income.  
So, your rentals aren't taxed at 15%, nor is your regular income taxed at 30%.  

You then take this $125k & subtract your itemized or standard deduction.  Again, super oversimplify but let's say this is $25k to bring your taxable income back down to $100k.  This $100k is then run up the marginal tax brackets.  

Let's say you're married filing joinly.  Your first $20,550 is taxed at 10% = $2055

Your next $62,999 of income is taxed at 12% = $7559

Your next $16,450 of income is taxed at 22% = $3619 for a total tax of $13,233.  ($2055 + 7559 + 3619).  

Now you subtract any tax credits for your total tax.  
Assuming you have no credits, your total tax is $13,233.  If you take this divided by your total original income, ($125k / $13,233) & you're actually only paying a tax rate of roughly 9.5%.  Much different than the 15% or 30% mentioned earlier.  

 As you can see, it's pretty nuanced.  In my opinion, when people say "generally" anything about taxes, they are "generally wrong".  Feel free to reach out to me if you want any clarification. There's only so much depth you can go into in a forum post :) 

@Mary Jay, I agree with Michael Plak's comments.  Taxes are not as simple as "30% tax on 100k equals $30k".  

Tax rates step up and down and you are not taxed at your final tax rate, you are taxed incrementally based on your income and your filing status. It also depends on where the income is coming from. Rentals, taxable accounts, pension, social security, IRA, Roth IRA etc. All of these are taxed differently.

In general though, your tax burden should go down slightly when you hit retirement because you are no longer making wages (fully taxable income).  And now you are living off of other means (which are taxed differently).  

Long Term rental passive income is not taxed at 15%.  I think you're equating that to long term capital gains (like from investments).  Long term rentals have advantages in that you take your total rental income, minus your renal expenses & deprecation but this number then flows to your 1040 "above the line" which means it is taxed at marginal tax rates.  

Bottom line is, you won't get a fully complete answer from a forum.  Feel free to reach out to me with more specifics.  I'm happy to take a closer look for you... 

I've watched a handful of Sean Razditch's videos recently.  Then I did an incogneto search of my city, clicked "I'm flexible", then a week stay & added it for the next 4 months.  The theory is, without specific paramaters, Airbnb will show you their "best" listings.  Mine was not on any of the first 15 pages.  

The funny thing is, I have better photos, better review and many more of them than many of the "best" listings.  What I ended up finding out from this is two main things.  
1) it's believed that Airbnb prioritize listings that are booked out into the future. It's an indicator that your property is popular & they like that. They like people booking your property well in advance.  When looking at yours, you're pretty empty for awhile (hence your original post).  

2) I did a comparison of all of the similar "best" properties to mine & found out that most were charging less per night.  This was an indicator to me that they are getting booked because their prices were lower.  

I'm in the middle of the busy season for our rental (SWFL), so I've actually raised my prices 10% or so since I'm not worried about being booked.  But... it's a double edged sword.  If there are 500 listings in my area, Airbnb will show them all during the busy season because there is plenty of demand. But, as we enter into the slow season (lower demand), Airbnb (theoretically) will only show their "best" properties.  

So I'm left trying to balance, do I raise my prices during the busy season to get more money knowing I may not be one of their "best" properties & thus not shown as much during the slow season?  Or...

Do I lower my prices now to get booked far in advance during the busy season and which will hopefully result in becoming one of the "best" properties, which would show my listing more during the slow season? 

All that is to say, keep working on your listing.  Consider lowering your prices for a bit to entice 5-10 bookings to get your back in the game. 

Thanks @Michael Plaks, yes, this is for a property that I purchased and put in service in 2022.  
What do you mean enter 3-5 assets per property? 

Before you jump all over me with the "always hire a CPA" stuff, hear me out. 

I'm a financial planner & I've been pretty comfortable with taxes.  In most years, what I have planned & projected with my taxes has ended up being within about 5% of the final numbers when run by my former CPA.  

That being said, I am trying to add a cost seg report this year.  I paid to have the report done, I'm just struggling with how to enter the data into Turbo Tax premier desktop.  

Are there any accountants or CPA's who would do a standalone fee to look over this section for me to give me a second opinion? 

To clarify, I wanted to do this myself so I can have a much deeper understanding of the mechanics of a Cost Seg study and RE taxes specifically.  
Thanks in advance. 

You mean switching your entire portfolio to precious metals?  

I don't see any pro's in that. Other than a (temporary) sense that you've "done something" to stop the bleeding.  Precious metals are wildly volatile & in general, not a good investment. They are an inflation hedge.  

The best quote I've ever heard after 15 years as a financial planner is, "an ounce of gold will buy you a nice suit.  If you hold it for 20 years, it'll buy you a nice suit."  IE - it doesn't appreciate, it just hedges inflation.  

@Gabriel Starr, I wouldn't say that 401k's are bad.  They're a good investment for the masses.  As a RE investor, you have to realize that we're a group that is comfortable thinking outside of the box & taking on more work & risk.  Yes, I believe that long-term RE investments will outperform. But it also comes with a cost of extra work & complexity.  

You mention that the 401k & investment have fees, so does RE.  Property taxes, insurance, repairs, software etc.  We just tend to mentally think of this stuff in a different way as they are not labeled "fees".  As humans, we're taught that "fees" are bad so our brain tends to process anything with the word "fees" differently than we would process "property tax".  

All that being said, if your 401k is mostly in Roth assets, your "cost" to withdraw it may be pretty minimal. You can withdraw your contributions out of a Roth IRA anytime tax free as a return of your basis. The gains are subject to a 10% IRS penalty & taxation. However, if you're talking about a Roth 401k (vs. a Roth IRA), you may not be able to withdraw the full amount of the assets. In a 401k, your technical term is called a "participant". IE, you're just participating in the plan that your employer setup. You only have a certain amount of control & options. Think of, you're riding a bus. You're a passenger. You can't do whatever you want, you have to do what the bus driver says & go where the bus driver drives.

Email your HR department & ask for your "summary plan description".  They are required by law to give this to you annually & it spells out all of the boring details about your plan. This is where it will tell you details about withdrawals, loans etc.  

@Rodney Menendez, we're just wrapping up our first 12 months with our STR in CC. We have a 3/2 in SW cape, (Trafalgar & Santa Barbara) with a pool and no canal access.

I don't think the canal access is a dealbreaker.  We had great success in year one despite having a lot to learn.  We had probably a 70-75% occupancy rate. Year two should be much better.  

I'd be happy to talk more if you ever want.  Reach out with any questions! I can share my contacts with you also.  

Odd question for a public forum but... do you attend a church regularly?  If so, you can try Samaratin ministries, Christian healthshare, Liberty or Medishare.  

This qualifies as healthcare for tax purposes, but it's different.  

We have a family of 6 covered for about $550 / mo.  It's definitely different than traditional insurance. But we love it. We do a lot of natural or "outside of traditional healthcare" options. Chiropractic, naturapathic doctors, IV treatments etc in order to treat chronic illness in the house.  The best part is that you pay all of your bills on your credit card, rack up the rewards then other people pay you back the balance! 

I've used capital one for years.  I don't like big banks, but small banks just don't have as good of service in my expereience.  

We don't even have a capital one branch in my state & I've never had an issue with it.  No fees, money transfers easily & instantly.