All Forum Posts by: Graham Melvin

Hello BP, 

My property manager charges me $35/month for direct deposit once he collects the rents.  I don't know what he's using for the ACH transfers but is there something people are familiar with which is less expensive which I could propose to him to reduce these costs of having him send the money directly to me? 
Thanks!

Graham

Hello BP, 

Just wanted to follow with an additional spin on this question. If you already exceed the FICA maximum amount of taxable earnings in a day job will active real estate income not be subject to the additional tax? 

Thanks!

Graham

Hello BP, 

I've been approached about providing private lending (HML) for an acquaintances house flip. I wanted to know if the income from both the points and loan interest will be categorized as passive income (and subject to associated taxes) or if the points (fees to close) would be active income and subject to FICA taxes as well?

Thanks!

Graham

Bumped again to see if anyone on the forum can speak to using Tenant Cloud first hand?  Currently looking at using Cozy/Truerent/Tenantcloud and seems like the one with the most use on the site is Cozy but the others have better features.  Thanks for any additional info/testimonials!  

Hello BP forum. I recently listened to episode # 055 where it talks about getting lines of credit back by your home (HELOC) and I'll need to listen to it again but I thought it said you could get LOC backed by an IRA as well. In any event, I live in Bellingham WA and am having trouble finding a local lender that will do an IRA backed LOC. Does anyone know of any national lenders or Washington state lenders that will do that type of LOC? Or if these are no longer available I'll just take it off the table.

Thanks!

@Dave Foster, Sorry for the dumb question, but how do I search for articles by @Brandon Hall?  When I click on his name I don't see a way to search by articles he's written.  I see lots of posts he's commented on.  But not a clear way to search for what I'm looking for.  (sorry, forum newbie) Thanks!

@Dave Foster and @Brandon Hall, I really appreciate the responses.  Maybe I'm a little slow but I keep flip flopping in my head about how I understand this.  I may be preemptively posting as I have not had a chance to look at the posts you reference on this Brandon and I plan to do so later today.  

That being said, the intent to sell is still unclear to me for the following reason: 

I'm in my mid thirties, so if I look at my real estate investments in relation to the course of my life, it's likely I will end up selling most of them.  If I over simplify it to will I sell these properties I think the answer has to be yes which depending on how you read the above means it will fall into ordinary income.   

The counter argument that I keep flip flopping back to in my head is that while I own these properties I fully plan to make them work for me.  I will have someone living in the property paying rent, I'll be taking my depreciation, etc.  From that stand point per the above they would fall into the capital gains category.  

The part of your comments which is the most concerning is the reference to people holding properties for extended periods of time and getting nailed with ordinary income.  I'm hoping this was because they used it as a primary residence or something along those lines which won't be an issue for my business planning but again I need to read the referenced posts and educate myself.  

Just wanted to say thanks!  Having this type of resource is awesome.  

Graham 

 Russell, I've read over and over that if you hold the property for more than a year it's taxed as long term capital gains.  It appears that if you sell it in less than a year you're paying short term gains and if you sell too many of them in a year you get classified as a dealer and it gets taxed as normal income (FICO).  The benefit to holding for more than a year seems significant enough (assuming you're not doing 1031's) that it would be the standard.  

If I'm mistaken on the 1 year holding resulting in it categorized as long term capital gains can someone please point me to something that confirms that? 

Thanks!

Graham 

Hello real estate investors community.  

My question is about how fix and flips are taxed.  It seems like everyone talks about turning properties as quick as possible, however it's my understanding that if you turn it in a year it's going to be earned income and you're going to have to pay FICO (14.2% for self employed) on it and it will be taxed at your top income: assuming at least 25% tax rate.  

Am I correct that if I do a fix (say in 3 months), then refi my money out of it and rent it for another 9 months so I hold it for a total of a year.  That at that point if I sell it I will only be paying long term capital gains at 15%?  

My follow on question is if the above is true: why doesn't everyone do this and pull their money out after they fix it so they have money to start another fix ever 3 months and just have rolling 12 month projects where you're leveraged for the last 9 months of it in order to lower your tax rate by ~24%?

Thanks!!