All Forum Posts by: Joshua Thompson

Hey Justin,

I believe the majority of that would probably cost below $500 in which case most people would write off in the first year. However, if you owned a large apartment complex with say 100 units that $500 may now be $50,000 and might be worth it. I'm not sure what is used when doing a cost segregation and what isn't.

Hey Dee,

I live in CA as well but don't have any local CPA's or strategist to recommend. If you dig in the forums for a few minutes I'm sure there is a post there that speaks on finding a good CPA/Tax Strategist. I know one of the big recommendations I hear is find a CPA that also invest in real estate. Good Luck!

@Ashish Acharya

Is there a safe harbor or something of the sort that allows one to fully utilize the $500k exclusion while still turning the property into a rental at some point?

From a tax perspective what would be a smarter way to turn a primary residence into a rental and utilize as much of the $500k as possible?

Hey @Alex Varner I'm not a tax expert and kinda learning some of this myself so definitely don't take my word as law. I believe if your house hack ends up on your tax return as a rental (Schedule E) and you allocate a portion of your residence as rental space at a certain percentage I would believe you can take that percentage of the rehab cost and apply it to the rental depending on what was done. I believe the answer would take a lengthy post. I think the answer is completely different if you're house hacking or if you're speaking about the attached duplex you don't live in. I would talk to tax expert that could help you out. They will probably charge you for their time in tax season but if they save you $1000 and only charge you $500 you're still in the green.

Good luck! I would love to know the answer if you get one.

@Eric H.

From what I understand the property management company will report the gross rental income on the 1099 to you. Once you have your tax return prepared there are section to input your different kind of expenses which usually will reduce your income number from the rental. This is why its important to track your expenses throughout the year.

Hope that helps!

If I remember from reading up on this is you must live there for a year and 1 day, after that you can sell or rent out the property. If you submit an offer during owner occupancy only period and do not plan to occupy the home as your primary residence you are running a large risk and would recommend against it.

I've heard of investors that did this, then got told on by another investor that was looking at the same property. Once again I would recommend waiting unless you plan to live there for  a year at least.

@John Morgan

You got it! I would wait till after this transaction is complete. Figure out what you did wrong and right or what could have been done better. From there work your way up. Congrats on the first deal though!

@John Morgan Hey John, to answer this question I would first ask what are you trying to accomplish from real estate? What are your goals? If you're trying to set up "passive" income I personally would recommend sticking with the rental property search. This will allow you to have fund ready if you just so happen to see an amazing deal hit the market tomorrow. However, on the other side of things if you have time and the capital necessary to experience the other aspects of real estate without deviating from your goals then I recommend doing it. At the end of the day, it depends on your goals and what will get you there. 

For me, I've read and talked to other people to have a small understanding of the other aspects of real estate (flips, wholesales, multifamily ect.) which allows me to keep an eye out for any property that would be an awesome deal in any of the other aspects of real estate. I'm focusing on rentals but see may see another potential in a property. It's whatever you're most comfortable with, but if you do try a new aspect just make yourself informed.

With the given situation, you can take out a home equity line of credit (HELOC) and use it as a downpayment for a property in the mid-west.

Depending on the market where you're looking and the sellers, you may also want to look into seller financing. 

If your mom or you are willing to move you can sell the condo take the profits and move into a 1-4 unit residence. In this situation, you can use your profits as a down payment on an FHA loan. It would be nice if she could do this with a 2-4 door residence for some possible cash flow. After a year refinance or use remaining profit from the condo sale to move into another residence and rent out the one you're moving out. This is a good strategy to slowly acquire multiple properties.

There are many strategies you can take but the fact you are on BP means you're doing the right thing. 

The biggest tip I could give is this, where ever you buy a property ensure you know the market and location. Ensure you have boots on the ground that you trust to look after your property.

I'll help out. Three questions shouldn't take more than a few minutes!