All Forum Posts by: John T.

Okay.  We definitely will. Thanks again @Linda Weygant!

@Linda Weygant We recently traded in our "business" vehicle and paid a little extra to trade down to another vehicle that's paid off.  Are we able to claim the capital we spent on the new vehicle as an auto tax deduction on schedule E?  Thank you for your time!

@Dennis Weber, @Tony Gunter, @Chris Seveney Thank you for your responses.  Good to know the interest norms and ideal/usual practices regarding owner financing.

@Patrick Desjardins, @Ravi P., @Don Konipol I suppose I should start with a disclaimer: I know very little about owner financing and the rules associated with "playing the lender" in a deal.  To clarify, I'm operating under a worst case scenario supposing the property in question is ineligible for conventional financing.  So my exit strategies would be to find a cash buyer or owner finance the deal.  

My hope in this situation would be to have a short note period that would fully amortize in 5 years (if that's even allowed) that would minimize tax liability  while eliminating rental management/expenses.  My goal would be to unload the property fairly quickly while recouping the capital invested+. 

Thank you all for your feedback.  Your experience is highly valued and insight sought.

Hello BP Community!

I'm considering offering owner financing on one of my properties.  Property is worth 135K and is free and clear.  I want to offer a 5 year note on it to a potential buyer.  I've already spoken with a title company on putting it together, so I know it is possible.  My Question is...

From a tax perspective, should I charge interest?  My end target is to make AT LEAST 140K back.  Knowing that 140K is my end number once the note has matured, is it better to factor in interest and manipulate sale price to end with 140K or have no interest on the note and just get 140K in five years?  Does it matter from a tax perspective?

@Linda Weygant Thanks for the advice.  I had a tax preparer do my taxes last year, but the advice I was given regarding deductions for rentals didn't jive with the info i've read in books and on BP.  So I connected with another tax preparer (CPA) who also owns rental properties.  I will definitely be asking these questions come tax time.  Thanks!

@Michael Bertsch Thanks for the reply.  This info definitely helps.

Hello BP:

We recently used a portion of our HELOC as a DP for our 2nd investment property. I'm reading that interest on a HELOC can be a tax deduction. Is this correct? Am I able to write off the HELOC (2nd investment DP) interest on my primary residence on our taxes (schedule E) for the 2nd investment property?

Thanks,

JT

Thanks for the reply, Patrick. Good to know for next year tax time.

Hello BP, We bought and rented our first investment property last year. It is in our personal name (no LLC) and we did our taxes for the first time. We were keeping track of our business expenses, particularly our auto and home office expenses, but we were told by our tax preparer that we couldn't deduct those because they are not expenses that related to the "actual rental property." Here are our questions: 1. If we only have one rental property and we actively drive our personal car to look for future investments (in addition to running errands directly for our current rental), can we legally deduct those expenses? Do we need to have an investment business to claim those investing related deductions? We treat our rental endeavors as an investment business. 2. If we do all our own bookkeeping, landlording, and investment research from a specific location in our house (house office), can we claim the home office deduction even if we only have one rental property? 3. What is the difference between owning a rental and investing in buy and hold rental properties? Thanks for your help!

Hey Joe, I initially misspoke. Not HML, conventional loan. Thanks for the advice. Typhoon insurance and occupancy ratio seem to be the determining factors when seeking a cash out refinance or LOC on condo. The grind continues..