All Forum Posts by: Jessica Chow

@Danielle Scott Yikes! That sounds really messy. I am not a legal professional, just a fellow investor, but I have experience with LLCs. If I’m understanding your post correctly, you and your family moved the title from your name/individual into an LLC? If that’s the case, and you are not associated with the LLC, then you are NOT liable for anything. Moving a property into an LLC means the title name has changed from personal to commercial. It’s also why a lot of lenders won’t move a property with a individual loan won’t transfer to LLC/commercial loan. Means you can technically just stop dropping money into it, but it also means you won’t be able to take anything out. Best of luck to you!

Love the new app format and UI, but where is the search bar?? It’s pretty useless without it, and I use my phone more than my laptop....any pro tips on navigating the new UI?

Hello! I am looking for a CA-based attorney to help with creating an operating agreement and LLC for a STR in Palm Springs. Any recommendations? Thanks in advance!

@John D.- We have a guy :) He's got us covered on the new rules and regulations in PS, and some other buddies in the area are killing it out there.

@Eric A.- Thank you!

@Dave Foster- Thanks for that clarification (I think I'm tracking). Do you think it's better to minimum the income tax then, and just pay taxes after the sale of the property? Or do you think it doesn't matter?

We are definitely hiring an accountant and a lawyer to help us structure the partnership. Definitely needed in this case, especially if we look into more complex scenarios, like the monetized installment sale.

@Alpesh Parmar I looked into monetized installment sale, and this would only be possible under a 30-year loan, or a 30-year deal? Does it work after 5? We're not looking to be in business or keep the property for 30 years. Just 3-5 years.

Thanks for your Option 5! Definitely going to ask my accountant about that.

@John Underwood- Makes sense, thanks!

@Dave Foster- Very helpful, thank you for breaking it out like that. So net-net, it sounds like there's no "best way," since you'll end up paying taxes either way. Then the question becomes- would I prefer to pay income taxes or real estate taxes on the sale?

@John Underwood That part I do understand. But in the case of our multi-member partnership, waiting to die wasn't an option. We know we just have to pay the taxes, the question is more what scenario means we pay the least amount of taxes.

Hello BP family!

My friends and are thinking of investing in a STR in Palm Springs, bought under an LLC. Our biggest question is how to structure the exit strategy in the operating agreement, and the best way to distribute profits to minimize taxes paid, and maximize profit that we gain individually to use to invest in other properties (not under the LLC). We have been doing research on a 1031 exchange, which seems like a great option to defer taxes temporarily, but from what we understand, eventually that may need to come to an end when we eventually sell the property, and pay taxes on the capital gains. Here's the scenarios as I understand:

Option 1: Distribute profits (annually, for instance) via the LLC, and depreciate the value of the house so that we are paying minimal income taxes every year. Keep the house until it is depreciated to $0, and then use a 1031 exchange to buy a Like-Kind property. Then sell the house and pay taxes on the newer purchase.

Option 2: Distribute profits via the LLC, and depreciate the value of the house so that we are paying minimal income taxes every year. Then pay taxes on on the appraised cost of the home when we sell.

Option 3: Distribute profits via the LLC and pay income taxes on the profits, without depreciating the value of the house. Then pay taxes on any appreciation on the house when we sell it. (This is how, I think, most non-strategic tax accountants would do it).

This question may be moot, because it depends on each individual's end goal, but was curious anyone's initial thoughts, pros/cons, or insight into other options we may be missing. Thanks in advance!

@Brandon Miller Great advice, thank you! We will certainly look into that.