All Forum Posts by: Phillip Weickert

@Ryan Ingram.  Thanks for the mention. 

Majority of those are in rougher areas (at least in the Cincinnati). However some are starting to see change (Avondale).  Now the change could provide a lot of upside, but it maybe years before it sees the major change.  It would depend what your looking for (Cash flow vs appreciation)  

Outside of the Norwood areas, I wouldn't purchase in those areas, if you are investing for quicker appreciation.  Most of those areas will keep consistent on the appreciation, but should see some good cashflow.  The more risk you take, the more reward you can see.  However there is always the downside too.  

The other obstacle for Cincinnati is property managers.  I personally have not seen to many great property managers.  I have seen a lot of out of state investors leave because of the low quality.  I network a lot of with real estate investors (in state and out).  I have a couple that I think do a pretty good job, but their prices are higher.  Even though their prices are higher, I believe their quality is much better. 

@Logan Allec has some good points.  An easier way to see what local jurisdictions you will need to pay tax to is using this website through the state of Ohio.  You type in the address and it will tell you exactly what jurisdiction you need to file.  A lot of Cincinnati properties have a Cincinnati address, but are not taxed through cincinnati.  They could be in a non taxing jurisdiction or they could be in a smaller jurisdiction.

https://thefinder.tax.ohio.gov/streamlinesalestaxw...

Also I don't think its necessary to file for a new account ahead of time.  If you file ahead of time and you find out you don't need to file a return, then you might get a letter asking for a return you didn't need to file.  I would recommend getting the return prepared and filing it with no account number.  They then will assign you an account number once your return is filled.  There are a ton of returns filed with no Cincinnati Account number on them.  I would put it on the low end of your priority.

I would concentrate on knowing what taxing jurisdiction you truly are in first.

In regards to Ohio I would recommend filing the return, however you will most likely not have any tax due.  Ohio has a small business deduction where the first 250,000 of net profit is not taxed.  That said its still a good idea to file the Ohio return and show that you are backing out the small business income.

@Jordan Tannenbaum. First off Welcome.  

Second, you are forgetting real estate taxes and insurance.  Insurance could vary between $50-150 a month depending on what you were able to get.  Real estate taxes vary per locality within Cincinnati.  If you want to see what the taxes follow the auditor's website and search the address (http://hamiltoncountyauditor.org/).  

Also something that would be different for you being from Florida is the income taxes at a state and local level.  Ohio has a tax that you would most likely need to file and then a lot of the local jurisdictions have a local tax.  it can range from 1% to 2.25% depending where the property is.  If you have a loss on the property, you will need to file a return to claim the NOL for future potential income. 

The advice above is not based upon a client relationship, therefore you should talk to your CPA directly about your situation.

Jared Patton I sit in an office over in Anderson Township near 275 on the east side. I am more than welcome to meet you at some point if you would like to talk in person. Please let me know. PM me

William Crutcher Welcome to BiggerPockets! This is a great place to be to continue to help you along your adventure. The last Tuesday of the month there is a great Real Estate meetup hosted by Joe Fairless. Follow the link I have for more details. (https://www.eventbrite.com/e/cincinnatis-best-ever-rei-mastermind-november-edition-tickets-39292482874). If you can make it I would highly recommend it. Also if your looking for a CPA in Cincinnati that has real estate as well i would love to help you out. I specialize in individual and business taxes with an emphasis in real estate. Please fee free to PM if you would like to meet up for coffee or lunch.

@Jared Patton see my response above.  I am a CPA and if you need help with your taxes or bookkeeping please feel free to reach out.

Phil

The general rule is if the business is incorporated then you do not need to fill out a 1099-Misc. Therefore any LLC or individual name will need to receive a 1099-Misc. The filing requirement threshold for a 1099-Misc is $600. So if any contractor is below that amount you are not required to file a 1099-Misc. If you are unsure and want to file, its always better to get the W-9 filled out and file a 1099-Misc.

If you are only paying the GC (GC pays subs), then you only file with the GC.  Your expense is related to him.  He will need to file a 1099 for all the subs.

I am not 100% sure on the 3rd question, however I would take a stab saying if you have a contract with the GC that it states anyone he hires (subs) falls under this agreement.  Since you are paying only one person (GC), then i wouldn't think you would need a contract for every sub.  The one contract you have with the GC which has the clause anyone he/she hires fall under that initial contract.

Wayne you are correct. It's the 27.5 years

@Barry Cooley - The money that you transferred into the business bank account is not considered income and you will not have to pay taxes on this. This would be considered a contribution.  I agree with Michael about making sure you do not co-mingle your funds.  This can affect you more from the law side, but it can make it more difficult to make sure you keep your books in an orderly fashion.  Almost all businesses will need a contribution made to allow the business to get started.  Contributions can be used to fund future projects as well.  

I am a CPA, but please consult your own CPA with all the details. 

I am a CPA, but you should contact your personal CPA to make sure that you explain all the details to make sure they assess your situation correctly. That said, a few individuals above mentioned that you get a step up in basis at the date of death. This is true. What does this mean. The day your mom would die, you would want to get a FMV of the property. The FMV then becomes your basis in the property. Therefore you would depreciation the new basis over a 39 year life (falls under commercial at this point) excluding the value of land.

Each situation is different, but passing property or other assets at the date of death are great ways to pass on valued items while getting a step up in basis.  However in your mothers case we step into the area of estate planning.  As of current laws today (i know there were proposals but they are not law yet), if her net worth is not more than 5M then there could be some different planning to be done.  If that value is not close to 5 M then setting up an agreement with all parties so that you get the property at the date of death might be best (please consult with an attorney on the agreement).  

If you get the property as a gift, then you inherit her basis or the FMV at the date of gift. It is a lesser of the basis or the FMV. In real estate, a lot of times the basis will be the lower if it has been held for a while. So if she has owned it for a long time, then her basis might be minimal or close to zero. If you would ever go to sell it you would have a large capital gain. Now there are options to post pone this tax, but it would depend on the tax laws when you sell the property.

If you buy it from your mother, then we get into a little more complicated issue. Not saying it won't work, but you would fall into a related party issue. It would potentially only affect your mother. If the sale produced a gain then she would report and pay on the gain. If it reports a loss she would not be able to claim the loss. However the sale needs to be at an arms length deal. It would be advised to get an appraisal on it (potentially two to truly show its an arms length deal but thats for you and your CPA to decide) to show you are buying it at FMV.

Once again, please consult with a CPA that specializes in tax planning, because each scenario is different.