All Forum Posts by: Joshua Thompson

The property taxes will be on his Schedule A during the time the property was his primary residence, assuming he itemizes. Once it's placed into services as a rental, the property taxes will be a rental expense.

I agree with Gregory above and speak with the company he has his mortgage with. Many people buy a house with a FHA loan and then turn it into a rental but it doesn't mean it's always allowed. A mortgage broker would be able to answer this better. Perhaps @Anderson S.can help.

If it helps, I asked many clients this same thing and learned the clients who spend time each month updating books and records are the ones who spend less than 30 minutes preparing everything for us. 

The ones using software are hit or miss if it takes less than 2 hours or DAYS! With software, it's only as powerful as its user so some clients overcomplicate things and spend most of their time trying to "fix Quickbooks".

The most successful and quick clients keep it simple or keep it to their comprehensive level.

Hi Kin,

Three quick questions come to mind that would impact your situation. Would you be gifting this to your younger brother or selling your interest to him? If you sell your interest, would you do it based on the current fair market price?

Did your mother pass away and you two inherit the home? If so you may benefit from a step up-in-basis. Depending on the value at the time of death and your basis you may need to file a gift tax return.

I would speak with a CA attorney to determine the best type of deed to file and a tax professional to gather more information. Hopefully, this will give you some information to consider before moving forward and questions to answer 

 Of course and good luck!

 Yes, I agree with more information we could fill in the if, and, or buts.

Not a silly question at all but the answer depends on a few factors. If I assume this is a rental property, your income isn't over $150k, and you're not a real estate professional then the losses the rental property generates could offset other income up to a certain amount. 

This means you'll want to "write off" expenses related to a property you have in service because if those expenses don't benefit you this year they could in the future once you sell the property.

We can get into a lot more details with the "if" "and" or "buts" BUT I think this would be the "simplest" answer without diving into your specific situation here.

I hope this helps!
 

Yes typically you'll file the wholesale activity on a schedule C unless it was done in an entity (S Corp, Partnership, C Corp) but I see above you don't have these. If you've been active in this business and actively pursuing a profit during the year, the loss the business generates could help offset other income on your tax return. 

If you would classify this as more of a hobby which most people won't the first year, then the losses won't benefit you. Ignore this part if you're trying to make a profit with your wholesaling business.

Hey Sam, 

Welcome to the forums! I'm not sure of a tax professional in Virginia or Washington D.C. but I do know there are many great accountants here on the forums answering questions often. Most of them work with clients across the country and I would recommend reaching out to a few you see active in the forums. If you can't find one that is a good fit for you, Biggerpockets has a "Build Your Investing Team" feature to match you with a tax professional but not all of them are active in the forums. 

If you're a part of any investor groups it also helps to ask for a referral while interviewing tax professionals. 

Good luck!

Great question! Based on the purchase price, closing cost, agent fees and certain other items you will calculate (capitalize) a total number. A percentage of this number is then used to determine what portion is related to the ADU vs the portion of the property you're using personally. This will determine the depreciation amount. Typically it's better to have the seller pay the buying agent because that amount if you paid it would still need to be capitalized and won't be expensed entirely in the first year.

Hi Andres, 

Congratulations on the first property and businesses! I would recommend connecting with a few accountants you see active in the forums. Most of them are knowledgeable regarding real estate tax implications. 

You can also use the "Build Your Investing Team" feature here on BP if you're unable to find an accountant in the forums currently accepting clients. 

I recommend interviewing at least 2 to find one that will be a good fit for you and your current situation. 

Good luck and welcome!