All Forum Posts by: Account Closed

Hi Michael, Thanks for the reply. We are filing jointly. Sounds like you mentioned qualified joint venture or filing two schedule Cs. We live in NJ which is not a community state. Is that still possible?

Hi, I have purchased a 3 unit multi fam property under LLC (50/50 partnership husband and wife in NJ which is Non-community state) and financed (100%) through hard money lender(personal guarantee). After the rehab was finished we did a quite claim deed to personal name since that was the only way bank can refinance the loan as conventional investment loan. We now lsited the property for sale and we currently own it under our personal name after refinance. (so LLC does not own property

What are the tax impacts? I have met several CPAs but they say they are not sure. rehab cost was big due to contractor causing delays here and there so I am not expecting much return but at least I wanted to understand potential tax impact

 Thanks very much Dave. This is very helpful

 Thanks. Its funny because I actually hired a CPA who is also an Enrolled Agent because its the first year I bought this property. But to my shock, I had to 'provide him' all the possible deductions I could think of and itemizing was my idea which boosted refund by 2k. He was like 'oh ok. you do seem to get more' . This is why I decided to do it myself on turbo tax. His number and my number on turbotax matched almost identically. 

Great. Thanks Scott I think this is very help. Only thing is that I got a Closing Disclosure instead of HUD-1. I am going to look for similar fields.

 Thanks Taylor. 

1. my property is a legal 2 family property with 2 units. I am curious. Would it be illegal to calculate portion by square footage in this case? 2nd floor is only 41% of the house and they are also paying less bills due to their size. if I do 50/50 split, I will be getting less money in return.

2. Sounds great. I will apply your recommendation. What is your thought on depreciation calculation? ((Contract price + closing cost + prepaid closing cost) - calculated land value) / 27.5

3. Yes it is being financed. I have received sellers concession which paid all of those closing cost. Can I still include these items as part of my basis? Only items sellers concession didnt cover was home owners insurance and half of attorney fees.

I am currently house hacking and want to know what the best way is to maximize return on Schedule E. 

1. Dividing expenses - I see some post saying that I should just divide the unit by half. In my case, my tenants space is much smaller. I currently occupy 59% of house and 41% occupied by tenant (based on living square footage shown on appraisal )

Would you agree that I pro-rate my portion and tenant portion(sch E ) by 59/41? So apply 59% of Mortgage interest/Real estate taxes on Sch A and 41% of other expenses on Schedule E (like utilities, depreciation, repairs?)

2. Depreciation (land vs improvement). I have land value/improvement showing up on both my appraisal and tax bill. appraisal shows more improvement value so I am thinking of going by appraisal number ( obviously ) but wanted to see if this method wont have any negative consequences.

3. Depreciation (Calculation) - Is it as simple as adding purchase price + prepaid closing cost (half of attorney fee and full HOI premium paid with credit prior to closing. No closing cost paid at closing due to sellers concession) - minus total land value on appraisal. Then dividing the result by 27.5? Is this the number that I have to use every year?

4. If anyone knows, how do I prorate above depreciation on turbotax? 

5. Future UW income - Will lender typically add back depreciation, interest, hoi,mortgage insurance premium back when they calculate my DTI? I am curious if I can write off less but stay in minus range so that I will have more income (if they add back those above items )to increase income used toward DTI. What do you think?

I am currently exploring ideas of buying single family property and turning it into multi family or commercial. It will be either fix and flip or fix and hold.

If you are financing a deal through conventional or /Fannie mae HomeStyle / FHA 203b as single family in the beginning, what are the potential issues you may face when you eventually convert it to multi familly? ( in both case the property is already in multi family zoning or not in multi family zoning )

Thanks Charles and Mark. That was exactly what I was thinking. I was thinking about partnering up with my realtor or banker so that they finance my down payment ( even better if the whole mortgage amount but I doubt people typically have that much cash available ). 

But people think its risky and too aggressive. Properties in Northern NJ is expensive and saving up for 20%-25% will take many years. So far hard money lenders still seem to require 20% down for skin in the game.

I currently own a duplex in NJ which I am renting out half of unit and living on another unit. I am looking forward to do my next deal through either flipping ( buy fixer upper), purchase rental in low tax area, or buy a house through auction.  The thing is that it has only been 6 month since I bought my first property and I dont have 20% required for what most conventional, or hard money lender requires.

Would it still make sense to aggressively find a lender(or hard money lender ) or just wait until 20% is ready? I feel like I am losing out on lots of good deals especially when the interest rate began to go up. or am I too aggressive and taking on too much leverage?