All Forum Posts by: Diane E.

https://www.biggerpockets.com/... answered in the 1031 Exchange forum.  You will also find qualified 1031 intermediaries contact information.

If your modified adjusted gross income is below the phaseout amounts (generally $150K married filing jointly, $100K single) you will probably qualify for some or all of the special $25,000 allowance for deducting rental property losses, and you don't have to be a real estate professional.  IRS Publication 925 discusses this on page 4: https://www.irs.gov/pub/irs-pd...  But note that you have posted this question on the Notes forum, and note income is generally taxable as ordinary income without tax advantages.

@Mark S. , my take is that I think you're right that these shouldn't be reported as guaranteed payments.  

Partnership guaranteed payments can be either for capital or services. Internal Revenue Code section 707(c) defines a guaranteed payment for capital as payments that are determined "without regard to the income of the partnership".  So, I would think your distributive share is more of a priority allocation of net profits, and I would expect to see K-1 Line 1 ordinary income reporting.  (This could potentially qualify your distributions as QBI -qualified business income - subject to a 20% deduction under 199A.  Guaranteed payments aren't eligible for QBI deductions.)  Also, I would want to see Line 14 SE shown as 0 no matter whether it's reported as Line 1 income or Line 4 guaranteed payments.

Good luck in pursuing with AHP if you choose to go that route.  

@Matt Dangelo :  You can find most of your answers under AHP FAQs:  https://www.ahpfund.com/faq

1)  Is this a 5 year fund? See FAQ How long are the investments for?  

AHP response: Under the terms of our Operating Agreement, AHP must try to return all of an investor’s money no later than the fifth (5th) anniversary following the investment. If for some reason AHP is unable to meet this obligation, investors might receive a return of their investment later than five years, or not at all. If AHP is profitable, as it has been and we anticipate will continue to be, it is very likely that investors will receive a return of their investment sooner than five years.

2) Fees for Class Investors:  See FAQ Are there fees for investors?

AHP Response: No, there are no fees to investors.

@Daniel F. Harb :  In Bigger Pockets podcast #257 with long-distance real estate investor David Greene, David  talked about whether or not to use TK companies.  He doesn't recommend using TK companies unless you're just crazy busy in your highly-paid day job, because you're giving away your equity to the TK company.  David has accountability checks and balances and leverages technology to be hands-off and efficient in his out-of-state investing.  David just wrote a book titled Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Investments.  I've read the book and recommend it. 

You can direct that the rent be paid to the LLC, but the property is in your name and you will be taxed on it. See Wikipedia entry for "assignment of income" and another explanation here: https://www.accountingweb.com/tax/irs/what-is-the-fruit-of-the-tree-tax-principle . As explained in the article, the Supreme Court came up with the "fruit of the tree" principle in a case in which a father tried to transfer some income to his son without first having paid tax on it. The US Supreme Court ruled that "the fruit of the tree cannot fall far from the tree on which it was grown." What the court meant was that once income has been earned, you can't avoid tax on it by transferring it to another person.

For example, you can’t shift tax on a winning lottery or sweepstakes ticket by giving all or part of it to another person after the winning draw. To shift tax, you must be able to show that you made a valid assignment of all or part of it before it became a winning ticket.

@Account Closed published a blog post on this recently.  (Sorry, too lazy to post the link at the moment - worth reading Adam's whole blog anyway.)  Maybe get a background check.  No one cares about your money like you do. 

3) Discuss expectations with your JV partner. How often will you receive updates? How often will you receive financials? Are all docs and invoices available online? Monthly updates and reporting is best and transparency is key. Also, you need to balance the fine line between respecting your JV partner's time and getting the communication that you expect.

4) Review the JV agreement. Is there an out clause if you end up hating each other?

I'm sure there's more  -  but I'll leave that for other people to comment.

@John K. : @Chris Seveney has a really good  point.  Usually there's a lockup period (often three years) in note funds, so you can't use that cash to do direct note investing.  

My PPR note fund investment is a little different in that you can buy some notes from PPR and pay for the PPR notes using your Fund investment.  (This may have changed in subsequent funds, so check with PPR.)  When I looked at PPR's notes, PPR had second liens, and I wanted firsts, and it seemed like their inventory was fully priced.  So I didn't cash in any fund investment to buy notes. Still, my PPR fund investment is a great passive yield of 12% and that works for part of my passive asset allocation.  

@Lance Austin , I really agree with @Bob Malecki .  You need a baseline knowledge to be able to evaluate potential deals.  The Carson and Speed intro classes will give you that baseline knowledge.  Maybe Bob's program will  also give you that knowledge.  Check it out. 

Yes, you can dive in by buying something figuring that you'll learn - but you pay for the education one way or the other.  I bought a performing note figuring it would be fine.  It probably will be, but it's a pain in the butt (forced place insurance, behind on taxes), and I paid too much.  

@Lance Austin - some good suggestions above.  I'd recommend taking an intro course from one of the note educators like Eddie Speed or Scott Carson, go to one of the conferences near you to meet with vendors and investors, and check out Scott Carson's info at weclosenotes.tv.  There's also a lot of info on Bigger Pockets.  @Adam Adams has a great blog. Interesting point on Adam's last blog post - do due diligence on your potential JV partners too, maybe spend a few bucks on a background check.