All Forum Posts by: Justin Long

I'm currently invested in 2 LTRs in Gaston County, particularly Belmont.  I live in Gaston County, and the growth projections are very high over the next 20 years.  People are moving out this way as Charlotte becomes more densely populated and expensive.  East Gaston County is close to CLT/airport/interstate/soon-to-be light rail/river/lakes.  In other words, a lot haha.  I've seen a lot of movement in business development in Gaston County as well.  

Does the guest speaker info for each event get posted here?  

Thanks Dmitriy!

 It has.  It's been tempting to want to sell, but I don't want to disrupt the tenant experience or pay the LTCG taxes right now either. 

And yes, tenants make or break the experience.  Before I ever bought my first property, I talked to a co-worker that told me horror story after horror story based on his buy and hold experience.  He had purchased several C/D properties in a bad area, and didn't properly manage them.  He gave me a blueprint of what NOT to do as a first time investor. 

 Thank you sir!  I actually purchased back in 2019 (just added this investment into my profile, which prompted the post).  Back then material costs weren't nearly as high, demand wasn't quite as high, and the builder just wanted them off the books.  

It is performing well!  I wished I had more funds to allocate back then to buy more than 1 property.  The rent/price is very good in this area and having great tenants help tremendously.  

Investment Info:

Townhouse buy & hold investment.

Purchase price: $185,000
Cash invested: $45,000

This is a townhome purchased as new construction.

What made you interested in investing in this type of deal?

The first buy and hold rental townhome is located in a community and the builder decided to add a phase II. I checked what the list prices were for these yet-to-be-built townhomes, and based on the numbers I ran, calculated a decent ROI based on market rents as well as comparing what my current rental was bearing at the time. I had funds available, so increased my portfolio from a property count standpoint by 100%!

That's true. Thanks for mentioning that. Luckily I took advantage of the de minimis safe harbor election on the appliances, so it made things a bit simpler

Okay, thanks for explaining!  So there are two working definitions of cost basis:

A) For depreciation calculation:    Basis = Constant

B) For capital gains calculation:    Basis = Initial Basis - (years depreciated x depreciation amount)

I was saying that if I were to reduce my basis yearly by the previous year's depreciation, then that would NOT be straight line.  

So you are saying that the amount is the same every year (except for the pro rata amount the first year if bought mid-year) and that the cost basis is the same every year assuming that no improvements are made to the structure?  

I may be thinking about this way to hard. However, I am also a newbie to REI and the tax implications therein. My scenario is simple: Single family home purchased by me and in my name, mortgaged property, and rented out.

Once I have determined total cost basis in the property (purchase price + additional costs to close, etc.), I can then separate the land from the amount.  Then I apply straight line depreciation (structure basis/27.5) for the tax year.  My question is, does my basis for the following tax year decrease by the deduction amount I took in the previous year?  I wouldn't think so, as this would be by definition, NOT straight line.  However, after reading IRS publication 946, it seems unclear, as it states under the Adjusted Basis section on page 12;
"Basis adjustment for depreciation allowed or allowable. You must reduce the basis of property by the depreciation allowed or allowable, whichever is greater. Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). Depreciation allowable is depreciation you are entitled to deduct."

Am I reading this incorrectly?  Please help!