All Forum Posts by: Jason Velie

@Chelsea Smiley

Hey Chelsea, welcome! I’m an investor in the area as well. My favorite area is Rocky Point.

Y’all should come hang out at the BP meetup that @Joe Prillaman hosts at Waterline Brewery at 7pm on the 1st Tuesday of every month.

Yep, I live in Wilmington, NC and used to work at Live Oak Bank. They are very good at what they do. Best of luck!

Hey man, I've done a few deals in Pender and Brunswick, but I definitely plan to invest in New Hanover when the right deal comes my way. Feel free to reach out any time!

@Scott McIntosh

Thanks, Scott. Very good info.

The LLC I created is a sole proprietorship, so it doesn't require its own tax return.

Also, I learned that these purchases don’t meet the other requirements. I.E. they’re not new construction, and my rehab budgets were not equal to the amount of the purchase prices.

I do intend to purchase more in these areas, because I know them very well, and I’m very bullish on the appreciation in these areas. They’re not rough areas; they’re just slightly rural, but growing very quickly. However, it seems to only work for a QOF if it’s new construction or major rehab.

I might just go ahead and consult with my attorney and my CPA about setting up a QOF now, so I’ll be ready to use it when the right property comes along. I can’t imagine that I’d go 6 years without finding a property that I’d want to buy in it. Since my primary focus is rentals, it’s very intriguing that I could potentially pay zero capital gains tax if I correctly hold properties for 10+ years .

That raises another question though.

Let’s say I successfully create a QOF and correctly buy 5 properties inside of it within the next 6 years. Then let’s assume the new president’s administration decides to repeal this tax incentive. Would I be grandfathered in? Or is that just a risk I’d have to take, knowing that I could still have to pay capital gains tax regardless?

@Eamonn McElroy

Thanks Eamonn, this is the type of feedback I was looking for. I don’t know what I don’t know.

I didn't know about Opportunity Zone Funds, but I just looked them up. My LLC is not one of these funds, so that confirms that I can't benefit from that tax strategy on these deals.

In regards to the STG vs Income question, based on what I’ve read on the IRS’ website, the proceeds from my flip would be considered STG, because the IRS wouldn’t consider me a dealer. A couple of reasons why is:

1) The proceeds from the flip only a small portion of my earning for the year (I have a full time W-2 career), so it doesn’t meet the “majority of earned income” qualification; and

2) The sole purpose of the LLC is not flipping. I also own rentals in the LLC.

Now I know what to discuss with my CPA. I won’t bother him about Opportunity Zone Questions. Thanks again!

@Michael Plaks

No one is making decisions based on a single podcast. Forgive me for trying to learn.

The flip and rental purchase have already been completed, and they’re incredible deals regardless of how I’m taxed on them. They’re in the past. Already done. Again, no one is making any future decisions based on the answer to my questions. I simply heard of a tax concept that I thought might be applicable to what I’ve already completed, and came here to learn more about it before wasting my CPA’s time.

@Ashish Acharya

But “flip income” is capital gains, isn’t it? It’s short term capital gains, which is taxed as ordinary income, but to my knowledge it’s still a form of capital gains.

Also, I believe I meet those other requirements, such as purchased by an LLC, keeping of clearly separate records, etc.

Hello everyone! I believe this is my first post.

Let me start by saying that I will ask my CPA these questions, but I want to know what I’m talking about a little better first so I’ll know exactly what to ask.

This year, I completed my first flip and netted about $26k before taxes.

Earlier this week, I bought a rental (singlewide with land) for $15k, and I’ll put in about $3k to replace the septic lines and that’s it. Both the flip and the rental are near Wilmington, NC.

Listening to a BP podcast earlier today, I learned about Opportunity Zones, which I’ve never heard of before. I then looked up my local Opportunity Zones, and it turns out that both my flip and my new rental are in opportunity zones. With that said, here are my questions:

1) Am I understanding correctly that I will not have to pay any capital gains taxes on the rental if I keep it for at least 10 years? (The trailer is on a permanent foundation and deeded with the land as real estate.)

2) Is there a way my CPA can consider my $18k investment in the rental as coming from the $26k flip profit so I won’t have to pay income tax on that $18k?

3) Are there any other creative tax solutions that I could utilize this tax year since the flip and rental are both in Opportunity Zones?

Thanks!

I’ll try to make it! My next property is in Leland; I should be closing on 10/13.

@April L. Williams

I’m currently in the process of buying a Leland property from a wholesaler, and we’re using Bailey & Busby. I know a few wholesalers in this area that use them.