All Forum Posts by: Ying B.

I applied as soon as the ERAP1 opened (April 12, 2021) in my county with complete paper work.  The tenants are no longer in the property.  I had my attorney send her an email from the get-go asking for their cooperation.  The program administrator hired by my county has contacted the tenants over 20 times.  I have used the program's web feature send numerous reminders for her to complete her part of the application.  The program staff actually got hold of them and they said will work on the application but never did.  I shared in person 2 concerns with my county's Finance Director who oversees the money and the program admin leaders in an event to encourage tenant participation.  This is what the Finance Director said to me straight in my face, unprovoked: "Your problem is not our problem and we are not your solution. It's time for you to go".  I have contacted my Congressman Hice washington office 3 times in May and August.  I was referred to their district office case worker to help.  My criticism are 2 points: 1) If tenants refuse to participate after good faith effort on LL part, the money should be disbursed to LL as I housed them for free 6 months.  2) If tenants moved out for whatever reason, it should not be the ground to deny LL funds and again because LL did house the tenants for free and have well documented loss as a result of non pay tenants.  The ERAP1 program staff's response to what options LLs have with non responsive tenants has been: the program is designed for tenants so if they do not wish to participate, we cannot force them and your application is in limbo.   My hope is to get a letter from my Congressman to support my 2 points and provide congressional intent is to reimburse LLs in my situations. Then I will take the letter to talk to my district's commissioner in person to get his support and then appeal the situation with the support of my congressman and commissioner and I will email all other commissioners in my county as they have the authority to ask ERAP Admin to adjust the rules.  However, I am currently very busy with my full time job and I have spent countless hours on this fight already and not sure I have bandwidth.  For me, it is really a cause dear to my heart. I want to fight for the property owners who are deprived of their rights, robbed of their money.  This is as important as me getting the funding from the program.  I don't think enough property owners are fighting this effectively.  We need to work on getting the implementation rules of ERAP1 and ERAP2 changed to be equitable to property owners.  ERAP2 rules say if Landlords refuse to participate, the funds go straight to tenants with NO accountability and requirements for them to pay LLs.  This is blatantly criminal and we know Dems are behind this but Republicans are not intervening to look at those issues either.  By the same token, LLs should demand to the right people in power that they be compensated when tenants do not co-cooperate.  There are many aspects of the implementation of ERAPs that are against Landlords.  The next option is to ask our County Commissioner to allocate funding to small business as they received (separate from the ERAP) another 45 million relief funds. They can help small business out.  Our county had a successful program last year for small businesses where eligible businesses got 10K reimbursed for their operating expenses.  I benefited from that program but the Program vetted the application very very thoroughly.   We hear the Alabama and Georgia chapters of the National Association of Realtors filed a motion in federal court to vacate the ban that the CDC ordered 8/3/21. 

The NAA filed federal suit claiming that the CDC's eviction moratorium was unlawful and has left landlords "holding the bag on $26.6 billion in rental debt after operating under extreme conditions for 16 months," according to its announcement.

All these legal challenges are the right steps but little is officially taken brought to the spot light about how ERAP money is mishandled and LLs are deprived of equitable compensation in scenarios I have shared above. “Nothing is so permanent as a temporary government program.” https://fee.org/articles/the-p...
We just have to work at it when the journey is hard.  If we give up, we cannot go far.  

Six days ago, Tenant's washer hose on 2nd floor became loosely connected, which resulted in water damage to kitchen ceilings downstairs. Plumber went to check right away upon Owner being notified of the work order by PM. Plumber advised the hose was secured by tenant the time he arrived and it was 100% safe to use the washer again. Tenant did use washer a few times on subsequent days and observed no issues at all. However, on the day it happened, dripping from the ceiling below was noted. On the 6th day since incident, a restoration company (Owner - myself present) assessed the water damage and advised  moisture still present in ceiling cavity and it cannot dry by itself. Need to open up 2' by 2' on ceiling and dry out with special equipment. Need to remove laundry room vinyl sheet flooring to dry.  5+ stained areas noted in kitchen ceiling. This restoration company does not provide written estimate but advised verbally they would charge $1300 for opening, discarding damaged materials, drying, treatment.  Have not sent contractor for estimate on ceiling drywall repair, paint and replace vinyl sheet floor, baseboard in laundry room (<50 SF).  I expect based on the current scope the total cost possibly $2500-$2800.  Additionally I plan to get a drain pane installed and braided stainless steel hose for washer as opposed to the current rubber hose and get water alarm. 

PM does conclude the cause of the leak was due to the water line coming out of the washer and tenants be responsible for cost to repair but Owner pay to get the repairs completed then be reimbursed by tenants.  At the time of incident my insurance deductible was 1% of rebuild at $3459, less than expected total cost to repair.  I am asking PM to check on tenant's renter insurance to see if there is anyway for their insurance to pay as it is a significant expense paying out of pocket whether tenant pays or owner pays.  

Property is in McDonough GA.  I know the urgent priority is to 100% dry out the trapped moisture. Most restoration companies I talk to can start working right away.  Some company only do cleanup/remediation and not the repair work.  My questions are:

1) I would like to control the cost but not cutting corners.  Do I have any alternatives or company recommendations to do a equally good job for opening cavity, dry out w/ professional equipment, discard/treat affected areas other than using a restoration company and therefore keep this cost in check? 

2) Should I get 2 written quotes or 3?  

3) Is this better to get a company that does both water damage restoration and repairs or use 2 companies: one to address the water damage cleanup; the other address drywall, paint, floor, etc.   Any good company recommendations?

Thank you for your input!

I would still try to apply for the Emergency Rental Assistance program under your municipality. Yes. It does require tenants signature but if after Owner has completed all the necessary application paperwork, tenants who have vacated decided to not communicate, not collaborate, then I will still pursue with the program administrator to grant me an exception and consider me eligible as it can be argued that Landlord did everything lawful and the non collaborative party is the tenants and that should not take my right of compensation away.   I will ask my attorney communicate to tenants and program administrator to add a level of seriousness. I was owed close to 6 months rent and was able to evict in June 2020 as the first limited eviction ban did not apply to me.  On top of that, I was dealt with over $5000 property damage. The FAQ from the Treasury https://home.treasury.gov/syst... made reference to "rental assistance be provided to temporarily displaced households". I interpret it as to mean the ERAP does apply to those who vacated the property.  In the FAQ of Georgia's Fulton county's ERAP, to this question "If I was evicted already, may I apply", the answer is "Yes".  A law is not always black and white and it always leaves room for interpretation.  I don't think we should give up before we try everything. Landlords who incurred a provable loss has a legitimate case here.  If I am successful in getting the rent arrears covered via ERAP, I will report back on this topic. 

How to understand "bonus depreciation is not limited to your taxable income. You can deduct any amount of bonus depreciation"? If one claims bonus depreciation on components of residential real estate (roof, floor, plumbing, HVAC, HWH, etc.) which creates a loss on schedule E, let's say $30K but MAGI is about 250 K that year.   The passive activity loss limitation says if your MAGI is > 150K, you cannot deduct any loss from rental and you have to carry forward the loss (although you actively participated in your rental mgmt).  If claiming bonus depreciation, can then the rental loss 30K be used against ordinary income or not?  Thanks!

Thank you for your input!

I bought a building lot in 2014 and planned to build a new construction and sell it. Paid agent commission, architect fee, builder consultation and estimate, survey, soil test, HOA, property tax but the final construction cost could not be supported by that market. Not even able to break even. So I decided to back out from the original plan. In 2018, sold it with a loss. There is approximately $37K loss on this sale if I include the sale price differential and all the above as the cost base. I'd like to claim this as section 1231 loss in hope of offsetting ordinary income. Can you prepare me for any challenges or considerations in claiming section 1231 successfully? If I can claim it, do I need to have a business holding this property in 2014-2018. Do I need to have made a selection of section 1231 in each of the year 2014-2018? If so which form and which line do I make that selection. Or holding this as an investment property as a sole proprietor and pass through the loss under my SSN would be acceptable and correct? Thank you very much for your insight.

I learned so much from this thread. Thank you Nicholas!                                                

In 2018, I incurred significant improvement cost on a second property I own free and clear: replace flooring, paint entire interior, replace gutter, window frame, exterior door, new roof (done Dec 2017), electrical, plumbing components, and appliance upgrade. I was taking for granted the improvement cost can be expensed but by reading this thread, I learned that improvement/rehab cost cannot be expensed, rather had to be capitalized before it is “placed in service”. So I would like to argue the property was “placed in service” on day 1 in 2018 therefore rehab cost can be deducted as operating expense. Do you see IRS disallow this?    Facts:

In the first 7 months of 2018, I had my parents live there as their primary residence, but they were not able to afford the rent and did not pay any rent. I took care of utility, property tax, insurance, etc. Then I spent 3 months for rehab. On the 11th month, I started advertising the property for rent on the open market through a PM company. Received only 1 month rent, per my 1099 Misc issued by PM.

My objectives/questions:

1. Am I able to claim deduction for the rehab cost as opposed to capitalizing?
2. I considered myself materially participated in the activities related to the rental. Any challenges there?
3. Only receiving 1 month rent in a year but claiming significant rehab cost, does it raise red flag and how to justify the legitimacy? 
4. Do I need to gift Rent to parents? I read “if your parents can’t afford rent, you can claim fair market value rent and claim the amount they actually don’t pay as a gift from you to them. In 2018 and 2019 the gift exclusion, not subject to gift tax, is $15,000". Do I need to do this and how to do this? Will doing this change the gross rent collected for that year (meaning I paid the rent myself)?
5. In 2018, my husband and my joint MAGI far exceeded 150K. So even if I can claim rehab cost deduction and prove I materially participated in the rental activity, it still does not lead to deduct rental loss against ordinary income. So this “loss” need to be carried forward to 2019 in which our joint MAGI was 100K – 150K, offering phased out off-set against 2019 ordinary income.  If there were any excess rental loss (not used up in 2019), can it be carried forward to 2020?
6. Can the utility cost, property tax, property insurance, HOA for the whole year be considered operating expenses?
7. What is the best strategy that is legal here?

Thank you. 

PM should not get paid on a property they have not successfully collected rent.  Collection is a big part of why they get paid monthly.  Did the PM screen the tenants with high standard? Is the PM responsible for placing a tenant whose employment paperwork/status were not properly checked and past judgments were missed in screening?  Does the PM keep the property in top condition through regular maintenance and repair work? Do they inspect the property to catch issues at the earliest to prevent a disrepair?  Was PM able to enforce contract meaning holding tenant responsible when there is a violation per Lease terms?  If the PM failed in their duties and responsibility to you, not only they should not be paid, they should also be held accoutable.  I had a tenant that we end up evicting in June this year and it turns out a simple court search of the tenant by myself reveals that the tenant had past eviction, collection, and judgment that got to the point of creditors and landlord had to file legal proceddings in court.  Also the tenant had a live in boiyfriend who from day 1 was allowed to live on the property by the PM (yet not through the screening process) which is a violation of the lease yet PM turned a blind eye to it.  This has financial consequences to the owner because then Owner can't collect on those who are not in the Lease.  Additional research shows that Tenant income was never as high as what was stated in their application. So the suspicion is that this woman works under the umbrella of her boyfriend (both self employed real estate agents) and the paperwork was likely fabricated.   Further PM did not catch obvious problems during inpection so by the time property was returned to Owner for rehab, some major repairs were needed and had gone unnoticed by the PM.  I doubt your PM has fulfulled their basic duties to you in addition to not able to collect rent.  If that is the case, you need to hold the PM accountable beyond not able to collect the management fee. 

If I were the landlord I would have charged a pet deposit and recurring pet rent and would have simply said NO to pets and would have had explicit lease terms to address pet damage to protect LL in dispute like this.   The LL should have asked for tenants to carry insurance to account for pet damages.  LL should also know the law to send you a move out statement accounting & itemizing why they withhold some security depost within 14 days.  The fact they communicated to you within that 14 days about this concern, may not be an offical move out statement but serves the purpose of notifying you in a way.  Yes.  They should account for capital expenditures.  It's time to replace 12 year old carpet especially if it has been rented out for a good part of the 12 years and high traffic.  I would not be happy as the LL with the pet smell although I would absolutely replace the carpet regardless whether I am successful in withholding some of the security deposit.   I believe it is reasonble for tenants to give up some security deposit and reach a compromise if you want to be considerate.  If you prefer to fight for the security depost in court, due to technicalities, you may have a chance to win and win big but it is really screwing the LL and the LL is not that much at fault here either.