All Forum Posts by: Joshua Thompson

Hi Chris! 

It COULD work! The reason I say could is because your current income, tax situation, and real estate investments can dictate if buying real estate might benefit you. Depending on your business you also want to keep in mind that some of those funds you take out of that business might need to be used for taxes as self-employment taxes typically don't go away by investing in real estate. Reach out to your tax advisor, who might be deep in extension tax returns at the moment, and ask to have a consult or sit down. That tax advisor should be able to answer this better for you based on your current tax situation. Let me know how it goes!

Hi Ayoka!

Certain cost might need to be capitalized and depreciated over time and given the rehab was over $100,000 I'm sure there will be a few large transactions that need to be capitalized. However, with the property being placed into service it does help your case to allow for certain expenses to be deducted in the current year. Depending on your situation it might be better to elect to capitalize on all rehab expenses and a great conversation to have with your tax professional

 Hi Marc,

Great questions! To be clear sole owner and sole member are typically the same thing. If you and your wife own it together, then you have options to determine how to handle this. This would be better answered in a private setting with your tax professional to determine the best steps moving forward and structure.

 Of course and good luck! A good sit-down conversation with the tax professional should shed some light on the topic and help you determine the next steps.

This can be fairly straightforward, depending on your agreement and if a partnership return was ever filed, you'll want to report half or your portion of the basis in the property as well as half the sale price minus expenses. This should quickly calculate your half and their half to  report. Now depending on how this property was reported in the past, the agreement the two of you made, and possibly other factors this answer can change.

If you materially participate and the rental qualifies as a STR you should be able to take advantage of bonus depreciation on a STR. Keep in mind this year bonus depreciation is 60%. You do not need to have the property in your personal name, it can be owned by an LLC you're sole owner of without having to file a separate tax return.

For the most part yes and depending on what you have going on in life an LLC might be overkill and why I think John gave a terrific answer

Lol yes, so many different opinions right! I don't want to give my opinion to you here based on my experience with clients but I would definitely ask your tax professional on their opinion because you might be surprised by their answer. To clear up things though if you have an LLC just for rental properties you won't get any tax benefits for having an LLC other than an additional expense.

John did a great job answering this! The due on sale clause will be the biggest worry, even though it's uncommon for banks to enforce it, they have the opportunity to at any time. Typically they give you 30ish days to get the funds and in the time you might be able to find a new lender but every bank is different.

Yes you'll still be able to claim the tax benefits as long as you qualify even if the property is in your LLC. Know your tax situation first though because real estate may or may not benefit your tax situation!