All Forum Posts by: Eric Peterson

I can't find an answer to this question anywhere with a search of the group. I have a specific question about how taxes will be calculated selling a home that was originally purchased as owner occupied and has been a rental for over 3 years. For example...

Home purchased in 2010 for $200,000

Owner lived in the home for 5 years

2016 converted to rental property. At the time the owner moved out the home was worth estimated $300,000.

2020 value if sold ~ $500,000

I know there will be other calculations (depreciation recapture, etc but for now I'm trying to keep the math simple. Is the capital gain calculated off $500,000- $200,000 = $300,000 or do you get to use an estimated step up value from when the home was converted which would be $500,000-$300,000 = $200,000?

Can anyone also point me to anything online that discusses this situation?

I qualify as a real estate professional. I will have a slight loss from my rentals due to depreciation this year. At the same time my income from my business (real estate) will put me over the Alternative Minimum Tax limit. I will have a new CPA this year and when I met with him he said I won't be able to write off the loss as a real estate professional because of the AMT. I'm trying to find that in writing to double check but I can't locate that specific information. Does anyone know if this is correct? Thank you. 

@Oleg Kio...I believe I can have the home ready for rent (at least advertised) prior to the work being done. However, I may not understand what exactly ready for rent means. I can definitely have the home ready to be shown and even sign a lease, then install the tile before a tenant moves in. 

By the way, thanks for mentioning the podcast. I just downloaded a few episodes. 

@brandon hall I may not be understanding clearly. Would I add up all the items and they can't be above $2,500 or does each item by itself only have to be under $2,500? If each item only has to be under $2,500 is there some limit of 2% of the value of the property? 

Hello. My wife and I are buying a rental property and we are a little confused about how we will have to account for some improvements we may want to make. Will we have to depreciate any of these or can they be deducted this year? Can anyone explain what our options are or point us in the right direction of a resource that is current?

If it matters the home price is $299,730 and we both are real estate professionals. 

Here are some of the things we may do. If there is an overall limit we'd have to stay under I can eliminate some of these ideas. 

Replace carpet with tile floor (~$2,600)

Add fencing (~1,000)

Buy refrigerator (~$1,000)

Add ceiling fans (~$500)

Add gutters (~$1,300)

Thank you! 

Thank you. I have not had prior losses. This was the only rental property I owned last year. 

@taylor Bugna. Is there somewhere you can point me to where I can find this in writing?  

@Taylor Brugna Thank you. 

Hello Bigger Pockets.

I can't find the answer to my entire question when I search. 

I am a real estate professional

I had a loss on a rental property last year.

My income is over $150,000

Can I write off the loss this year or do I have to carry it over because my income is too high? I can see there is a real estate professional exception but I can't find anywhere that the income requirement doesn't still apply. 

Yes, my question has been answered. There may be better options overall but not that will work for this situation.