All Forum Posts by: Elle Scott

@Brandon Hall

 Oh my goodness, I am SO sorry. My response apparently never went through :-/ 

Thank you for this extremely thorough explanation! Its very clear with everything you detailed that I am in need of a REI strong CPA. There have been many discussions since reading your posts on whether or not to rent the second home or not. I've decided to switch some things up on my end here in SD so that I still retain the write off of the second home while I have this size of W2 income. I don't want to risk losing that in exchange for adding to the bottom line when it's really my only true write off. I'm going to instead, look into taking some of the equity out of it and purchase a cash flow property. Thank you again so very much for your help!

mainly about what rental income would do to my finances at this time. Frankly it will add to my bottom line and won't help offset my large income. So I'm at a bit of a standstill wondering what to do. Should I just store up capital right now, take the interest deduction from my second home and wait to have rental income? If that is taxed at my income bracket, why bother? Another proof point that I need an REI CPA lol not having rental income seems foolish to me if I have the opportunity for it.

Thanks!

Brandon, you make many excellent points here. I definitely need a CPA solid in REI that I can sit down with and strategize best and worst scenarios. You bet Im taking interest deduction ;) that has saved me in taxes for sure.

I would be extremely interested in hearing more about the taxes on rental income. Would that simply apply to this situation or if I purchaed an additional property, say a MF, and rented it out? Thanks! 

 Lol I received a picture of my snow covered propertt and then yesterday, completely clear. Oh the PNW ;) Thank you for the updated tip on rental, this has caused me to rethink my strategy. For now until I can gain a clearer picture of how a sale would effect my finances, I'm going to hold it and rent. I think the 1031 might be a good move in a year. Thanks! 

@Bill Exeter 

Thanks for this Bill. So basically the same would apply for a "second home" you bought and fixed up even if in the back of your mind you intended to rent it out after a year. 

You still need to change the status and actually rent it out for a year before becoming 1031 eligible? At what point does the intent need to be clear and yet not not effect the loan process if you did say you were flipping? Is there any other way Dave can avoid those taxes or is that just the name of the selling game going from one type of property to then next? 

Thanks! 

@Neil Patrick 

Welcome to BP! I myself am starting out, live in SD, born and rasied Newport Beach and invest out of state. It was logical for me seeing as my family moved to the Pacfic Northwest 13 years ago, but as much as I love my home, the numbers and water crisis keep me looking outside of CA. There is so much opportunity out there and BP is an amazing resource for it all. 

All the best!

Elle

@Dave Currence

@Bill Exeteris a great resource for these questions in case you'd like more information. I myself am learning more about how to leverage 1031 in the best way and have found his knowledge extremely helpful. 

All the best!

Elle

@Robert Snell

 Welcome back Robert! I myself am starting out and live in SD. I prefer to invest out of state but networking and supporting other's success goes beyond location :) 

Wishing you all the best!

Elle

Nicely done and thank you for the post on this @Justin B. As someone starting out, it's extremely helpful to hear all about the success and methods you used. I don't really see it as bragging but helping :) Keep up the great work and congrats!

Oh Shawn, you are definitely seeing my issue correctly. Thank you for your post. Simply put, I was advised to have a write off prior to really truly understanding the possibilities of REI. I didn't have the best mentors then, but I do have some now and obviously BP to the rescue!

No, I am not renting it out which was fine in the beginning because I needed to remodel it and also legally couldn't rent it out as I purchased it as a "second home". I would have loved to buy a MF in San Diego but I was given perhaps not so great advice and wasn't ready without better mentoring. 

I would have had an enormous mortgage over my head which I wasn't comfortable with at the time ( again I really didn't understand REI to better leverage partners, etc)

Rental income would have raised my income, that cash flow would have been taxed heavily and I wasn't positioned to self manage at the time. 

Condo- yes that would have good but I saw the prices of Condos at the time and it was insane to me at 400k+HOA dues.

My CPA and advisors have told me that it's imperative I switch my income stream and I'm laser focused on doing so now. No more trying to dodge tax bullets while continuing to be an employee ;-) 

So with that said, redeploying my capital (given the numbers make sense to sell) sounds like a great idea to get into something bigger with greater cashflow. 

Thanks Shawn!