All Forum Posts by: Dave Holland

@Mark S.

Sorry I missed the earlier mention - seems like you have it mostly figured out at this point.

The software I use will typically allow you to either pay via direct deposit or it will generate a voucher form that you can mail in.  This sort of fee is common, but the amount varies from state to state.  

Just to answer your follow up above, yes you're just going to want to deal with your LLC income in your responses on this form. Think of the entity as being a separate person being taxed so your individual tax return will have no bearing on how you fill this out.

Dave 

@Mark S. @Chris Wood

Actually when you hold foreign investments it is relatively simlar to holding a domestic property. You'd have a Schedule E (assuming it is rental income) with all your income/expenses related to the property. 

One notable difference is that buildings are depreciated over 40 years for foreign properties. 

No strange fees/taxes based on the entity from a domestic perspective, I would need to research whatever foreign county you are investing in to give a definitive answer on their filing requirements. 

@Garrett Canter

You'd have to speak with an attorney to get advice on the structure you describe. 

I'm not against LLCs, in fact I am forming one for my rentals, but it's to protect my personal assets from my business. Don't think I'll want to protect my business from other business assets since I buy 2-4 unit properties right now. I'd rather spend the money used to form and administer more LLCs on an umbrella policy that will cover all of my rentals. But that's just the way I feel most comfortable which might not necessarily work for you. 

@Garrett Canter

I'm not an insurance expert but my understanding is the umbrella will protect you from liability above what is on your landlord homeowners policy. It is relatively cheap and considered a good product. 

I did want to comment though about your use of one bank account. You run the risk of losing all the protection the LLC provides when you do this. Just like using a LLC account to pay personal or vice versa. If you want to run separate LLCs then get separate accounts.

Do you have partners in all your LLCs? If not then you can definitely simplify your tax return. 

@Mark S.

Thanks for the mention, sorry I wasn't around last night. You got good information from @Cameron Skinner - I agree with him. 

Dave 

@Sarah Young

Are you wanting an accountant that you can meet in person? If so I think to best way to find a good one would be to ask who other local investors use or to go to a local REIA meeting and ask around there.

If you are comfortable scanning / emailing your documents as well as having meetings via phone and/or Skype then there are more options for CPAs who work virtually and work exclusively with real estate investors. There are several who frequent these forums that are good options. 

I would suggest to start this process because once tax season truly begins in a week or two, many won't take on new clients. 

@Mark S.

Yeah the nature of your business sort of makes it fall into a grey area.  For example with a retail store it is very clear, did you open your doors before 12/31 or not?

If you were my client, I could form an argument to say you either had or hadn't started operating the business and therefore I think you could do it either way. Even the tax code is not always black and white.

I would lean towards advising you to go ahead and claim the expenses. If you have the chance to lower your taxable income now, then you should. It would complicate your taxes some, but probably not to the extent to make it not worth it.

Lastly, even if you do want to claim the business expenses now, the March 15th deadline wouldn't apply to you. As a single member LLC your business income just flows through to your personal return which is due April 18th. The March 15th deadline is for entities that are required to file separate returns. The idea is that members/owners in those entities can get their K-1s earlier to get their personal returns done in April rather than extending.

Hope that helps.

@Mark S.

Thanks for the mention. What you've got is start up expenses, did you spend less than $5k? My guess would be yes but let me know if that's not the case because the answer would change slightly. 

Generally speaking you can expense up to $5k in start up expenses in the tax year that you begin operating you business. So the question becomes did you start your business or just set it up? Sounds like you might have just set it up but weren't necessarily "open for business". 

So in your case, based on my understanding of your situation you would deduct these expenses on your 2017 taxes once you begin actually operating your business. 

@Fletcher Caulk

As a CPA I tell people all the time that they don't need a professional to do their taxes.  If you just have W-2 income, mortgage, interest income, etc. then absolutely use a tax software and save your money.  

When you own a business, or have rental income, is when I recommend using a professional. Even if it is just a single property. When you answer questions on those tax software packages you need can easily get led down an incorrect path, and you'll never truly know that your return is complete and accurate.  

This is not to mention that a professional is someone that you can rely on during the year other than just tax time that will save you time and money.  

Hi @Art Maydan

I generally tell people to look for a CPA just like any other contractor. Talk to a few and make your decision based on who you feel the most comfortable working with. If you want a local CPA then maybe ask other investors you know in the area, if that isn't important to you there are several that frequent BP and are good options. 

In any event, house hacking, in my opinion, is even more complicated from a tax perspective than a fully rented property so I would definitely suggest a CPA that specializes in real estate.