All Forum Posts by: Jeremy Frederick

Last year I filed one tax return as a sole proprietor which included my W2 income (from my "non-realestate" day job), and the proceeds from my first 2 rentals with only write-offs from the 3rd because it was purchased that year as a fixer upper. the depreciation and repairs with carryover losses from previous years ended up basically as a wash (no net profit). This is the first year I've done a flip so I'm still figuring out the best way to structure everything. I was under the impression that paper losses from rental property are considered passive losses and cannot be carried over into active income to take away from my W2 taxable income because I am not considered a "real estate professional". I am assuming this is the same case for carrying that passive rental loss over to the flip (because flips are considered "active income" also) which means I'm sitting here with 25k in cash that I've got to pay taxes on. I know, I know...there are far worse problems to have lol, but I figure at some point I'd like to acquire a new truck and since I have a jeep just sitting there as a spare vehicle and I'm only 1 person, why not purchase it when I can write off a portion of the purchase price and then use it as a personal vehicle after the depreciable years if that is allowed. as far as using that 40k to sink into other investing endeavors I would still do that. I plan on financing the truck at 0 interest so that I'm not actually using the 40k that year, just taking the depreciation that year. ill still have it to use for other opportunities as they come up and my plan would be to purchase something that would pay the truck note and still have extra left over. Also, my salary (which I feel is basically impossible to avoid taxes on) usually provides me with plenty enough to invest with, so I'm just trying to figure out a way to shield this 25k if possible. I always thought I could just 1031 exchange flips until I owned one cash, then rent it out and start the process over. however, after researching a little I realized that flips aren't eligible for 1031, only rentals :(  Are there any other creative ways to save myself from paying my taxable rate on the flip proceeds? even if I could get it down to long term capital gains that would help immensely!!!

thanks

This is my first post on here so bear with me. I am looking for ideas on how to offset my real estate gains. A little background is I am single and make approximately 150k/year in my non-realestate W2 dayjob. I have 3 rental properties. I started with 1 and the past few years I would buy a fixer upper and use the noncapitalized repairs and expenses on it and the noncapitalized repairs and expenses on the existing units and combine that with the depreciation on all the units to offset the gains on the ones rented. This year, in addition to the 3 units (approximately $15,000 in profit) I was involved in a flip in which I made $25,000 in profit. I have a jeep and a truck presently and am considering selling my jeep and buying a 2nd truck to use solely for the business to offset this $40,000 profit. My questions are: 1. can I combine the rental and flip profits and buy another truck for 40k (keeping my original truck for personal use) and use the new truck solely for business and write off 100% of the cost in year 1 which would offset the 40k gain 2. Since I know my personal truck will eventually crap out on me, after the depreciable life of the work truck is done (im assuming 5 years) could I then begin using it as a personal truck, retire my other personal truck and buy a new work truck 3. this is a LOOOOOOONG shot, but is there a universe in which I spent MORE than 40k on a truck (or bought another investment property) and was able to move some of the loss to my W2 income to lower that taxable amount. I know I normally am not able to pull losses from my rental because its considered passive, but I'm wondering if the fact that I did a flip can move that income into active. thanks in advance for any guidance