All Forum Posts by: Derek Smith

Brief background... Over the years we've accumulated a couple properties simply due to relocating for work. We kept the idea open of being able to move back, simply for work reasons having access to office. However, now being able to work fully remote we'd like to explore transforming these into a business/rental properties.

What are the first steps to figuring this out?

I understand, from time to time, HOA may impose a special assessment fee to the homeowners. My HOA has just requested all the homeowners pay the HOA insurance deductible ($1,700 minimum per unit/$40k per building) to fix hail damage to the roofs. However, the HOA refuses to provide any of the bids (if there are any outside of the one they accepted). Is this legal for them to withhold bids and why they selected the repair company?

@Eamonn McElroy

Thank you for you time and knowledge. I may be able to learn some things from searching the web, but I think to your point, there is a reason why so much time (for a CPA) is dedicated to this area and why it would make sense for us to go this route.

I will continue to self-educate, just because do not want to be completely in the dark, albeit we'll seek out professional assistance.

Thanks again everyone for all your assistance!

@Eamonn McElroy

I am beginning to skim through this information:

https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations

Would you have any recommendations of other articles to read?

Most of what I've referenced are from various articles people have written. Naturally most will be general information; which is why I am here asking additional questions. Taxes are not my area of expertise, so definitely appreciate everyone's responses/knowledge that may be shared. 

As I suspected in the beginning, we wouldn't be able to effectively handle the tax aspect of this project in beginning, so gaining as much knowledge as possible for the time being.

@Eamonn McElroy

there are always grey areas in law; regardless of which area.

repairs versus improvements. Replacing a floor; where does that fall? Some would say improvements; however, the sub-flooring had a huge hole in it that we had to cover up. Which forced us to replace both sub-flooring and actual bathroom flooring.

Hanging new drywall in the kitchen; again improvement or repair? Our issue here was the fact the house had zero insulation making the kitchen completely unbearable to be in during the winder months.

"Perspective" may have been an incorrect choice of words; however, the point was that its not all black and white as to which category these all fall into; at least that's my perspective =p. Ultimately, how do we "correctly" define where these should go? Again, this house was bought via foreclosure so how is everything not considered a repair over an improvement.

this may be better suited for some sort of CPA, but the hope was to do this ourselves. May not be plausible off the bat for us, as there is still much to be learned. Sorry if our questions have become too specific 

I guess it depends on the person's perspective, but for the most part I would think all could be written off versus depreciated. (Just knowledge is fairly limited here).

The house was purchased as a foreclosure and no work was ever done to it until now; 8 years after the initial purchase. My personal opinion would be, everything was truly necessary to make as a rental. Again, limited knowledge, so do not fully know where to draw the line in the sand.

Good news is we've been keeping all receipts for the work being done... just seems to be piling up quickly

At the moment just the GF. Wasnt going to become a joint venture until we move into LLC.

Thoughts?

Much appreciated for the responses!

Recently my girlfriend and I have been remodeling her house, some changes were required (repairs) while others were more cosmetic (general updates). Once finished we will list it as a rental, in a couple months, but we have yet to put our property into a LLC.

Are we able to write off any of these expenses even though the house is not part of a LLC yet?

A friend of mine has asked me to help him with his home buying experience, or potential one. He has submitted several loan applications and sent over to me his "GFE" or so I thought he did. After reviewing the docs it is clear to see the new standardized form was not used, so does this mean we do not have a true GFE?

On the bottom of one it does state, "This is not a GFE but only an estimate of closing costs."

Second question, is it worth our time in comparing fees provided or should we contact the lender for the standardized GFE form? Finally, any idea why he wouldn't receive a GFE and got estimate on closing costs instead?