All Forum Posts by: Jose Contreras

@Will Barnard

Good point! I guess the question will be is it worth the additional effort for marginal gains after taxes. I will have to dwell on that.

Thanks!

Hello everyone

I would love to get an opinion on our situation from everyone.

My wife and I buy and hold long term properties. So far rents are great and we would like to purchase more properties, however we are limited in how much we can save at any given time, which is why we are considering a partnership with another couple by forming an LLC, where we buy and flip homes to generate additional income to buy our own properties.

Our limitation is that we are high income earners already from our W2 income and are wondering how income from a flipping business would affect our tax situation. I spoke to our accountant and he said that the income from flipping would be taxed at our tax bracket and may additionally need to pay social security tax, etc.

The alternative is that we buy and hold larger properties together, however this complicates the situation in that we would need to be in a very long term partnership, which we are not ready for at the moment.

Appreciate any thoughts or comments on the matter.

Thanks

@Lane Kawaoka

I agree. We are trained for our professionals trades but never trained financially. We have to learn this on our own!

@Joe Splitrock

Thank you. I will not be firing my CPA based on advice here. I wanted to make sure he was correctly interpreting the tax law while at the same time making sure all tax benefits are being applied. I am a newbie with all this so this has all been a learning process.

@Dennis Pressey Jr

Please elaborate further ....

@Tony Kim

That is absolutely the biggest problem.

But I think if we are able to generate enough rental income, one of us going part time W2 may be enough to offset the tax paid on a full time W2.

@Becky Lai

Thank you very much for the excerpt.

I wonder how we are able to show this in a practical sense?

Perhaps having my wife work part time in her W2 and spending the rest of the time working on the rentals might work?

I suppose it is also difficult to show that you are spending more than 50% of personal time on RE vs part time W2.

@Audrey X.

Thank you. I'm working to understand it like everyone else here is.

@Nicholas Aiola

My wife and I are RE investors in the Cleveland Area. We buy and hold properties, rent them out and manage the properties ourselves. We also have a full time job with W2s, our combined income is >$400k/yr. Are we able to take on any tax benefits from overall losses on a given year?

Thanks for holding this session.

@Audrey X.

Not evading. I have paid plenty of tax and happy to keep doing so. It's only fair that I take full advantage of how the tax law is written. Please do not misunderstand the point of me asking.

At the end of the day, our RE investing activity generates economic activity for a lot of people not just ourselves. One would think that the government understands this and would pursue legislation that benefits investors in some way. I believe this is where the tax benefits of RE investing come from.

Again, thank you for bringing this up as it reassures me that my CPA is doing what is right.