All Forum Posts by: Jim T.

Not intended to be tax advice but I will give my thoughts.  I am not a tax expert. Just giving thoughts

yes, the PM is supposed to indicate gross rents and you itemize the expenses, including his fee. 

What I would do (not recommending what you should do) would depend on if you also deducted those expenses. If you did not, I would leave the past returns alone since tax-wise there is no difference. If the IRS sends you a note asking about this, I would then correct all the forms. Since there will be no additional tax due, there should not be any penalties. 

However, if you also deducted the expenses so the expenses were, in effect, deducted twice, I would correct all past forms. 

In either case, do it properly going forward. Ask the PM to correct their form but even if he doesn't, you should report the actual rents received on schedule E line 3 

@Eddie Knoell

I am not suggesting you forego previous advice in this thread but I will add my 2₵

Presumably your book will pertain to all of your properties. You can allocate expenses to multiple properties by allocating a portion of the expense to each property. The IRS doesn't seem to care which method you choose but it must be reasonable and consistent. 

For the book, it seems easy enough to split the cost evenly to each property. Others may advise to apportion it based on the income they provide. 

In practice, I think a lot of people for an incidental expense just throw it all into one property. This is not what the IRS advises, as far as I know so I would not recommend this. 

Thank you  @Logan Allec , very well explained. 

@Logan Allec

If one overpays the state income tax, they receive a 1099-G the following year for the refund amount. This makes sense since  you were able to deduct all that was deducted rather than just what was ultimately owed. If your highest tax bracket didn't change from one year to another,  it is pretty much a wash. 

However, now that the state income tax is limited, you may not be able to deduct all the state income that was deducted. If you then receive a 1099-G, you will be including income that was not deducted the previous year. Let me use an example to hopefully make clear what I am trying to say (Property tax kept out of this for simplification)

2018 - total state income deducted = $12,000. You are able to deduct only $10,000 for the 2018 tax year. After you complete your state returns, it is determined that the state tax due is $11,000.   You overpaid by $1,000 and that $1,000 is given to you as a refund. If we are playing by the old rules, you will receive a 1099-G for $1,000 to be included as income for 2019 tax year. Did you just get hosed? You paid $11,000 in state taxes, deducted $10,000 in 2018, and received a 1099-G for $1,000 (which will be added to your income next year). 

Let's say you only had $10,000 deducted for state taxes. You deduct the entire $10,000. Turns out you owe an additional $1,000. That's fine, you write a check to the state for $1,000.  You are still paying the same $11,000 to the state as the previous example but next year you don't get the $1,000 1099-G. It sounds to me like you come out ahead this way. If this is right, lesson learned, don't overpay state income taxes. 

 Todd, you are a genius, at least I think you are. 

My situation is a little different. My wife and I are over 59 1/2 and we each have Roth IRAs for many years (over 5). Based on your scenario, I am wondering if I can do something similar. I am past the income limits to deposit into Traditional IRAs (because I have a 401k at work) but my wife has earned 0 in 2017.
 

My plan, deposit $6500 into my wife's Traditional IRA this year and roll it into the Roth next. Well, actually, I can deposit into the Traditional this year and just withdraw it next. either way, deducting with the old tables, declaring the income with the new.

For me, in the 25% bracket this year and 22% next, I should save 3% of $6500 or $195 in my pocket.

I will wait for the experts to chime in to determine of this plan will work.   

The annual NOLO Every Landlord's Tax Deduction Guide is out. As we all know, there are changes for 2018. Those changes are not covered in the book but the author does say changes will be posted to a web site as it becomes available. 

The reason I am posting this is the is there is a coupon for 40% off expiring on December 26 on top of their already sale price. I got the ebook for $16.76.  

https://store.nolo.com/products/every-landlords-ta...

I don't think for one minute that this, or any book replaces the knowledge of a tax expert or CPA. However, I do believe in knowing as much as I can so I can communicate better with the experts. 

I am not affiliated with NOLO or any publisher. I gain nothing if you buy this book. I am just passing along the info

 It appears that if the income is less than $500,000/$250,000 (mfj/s), the deduction can still  be taken. 

I did not see any SE tax in the Senate Bill like there was in the House Bill. Does this mean we will not have to pay SE tax if property is not owned in a Corp? 

Brian Schmelzlen

In regard to the 23% deduction, I want to make sure I understand. 

Does the 23% deduction come off of the SchE income (line 17 of 1040) providing the income is less than $500,000? 

Do the properties have to be in an LLC (or S-Corp) to qualify? My properties are currently just in my trust's name. If the answer to this is Yes, it sounds like I have to start an LLC and retitle them.

Thank you all

 See this link Click Here There are lots of links to the housing code that are in the area of discrimination. 

People suggest taking first qualified applicant as a method to avoid the appearance of discrimination. That's fine. It doesn't mean it is the law.  There are other ways.

Seattle has a new law (now set to take effect July 2017) requiring offers to qualified tenants in sequence of application. Click Here The city is being sued over this policy so unknown if it will stick. 

I appreciate the offer to visit me in prison. Can you bring cigarettes? I hear it is an excellent bartering tool in the big house.