All Forum Posts by: Michael G

Elizabeth Colegrove good suggestion. I will get a book!

Sounds good, I understand now. Thanks buddies. Yes, I will most certainly find a good CPA that deals with rental properties and things... no more turbotax :)

Thanks guys, Jon Holdman that is exactly the kind of thing I wanted to see. I definitely will use an accountant for all of this when I get started, I just want to have an understanding instead of blindly trusting a CPA to do all he can to save money for me.

Your reply opened a few more questions for me. About depreciation and turnkey properties, for example, I thought if I paid 120k for a rent ready property, I could depreciate it by 120k/27.5 a year. But it appears that I need to separate the land out from that, how is it done?

Also you said the cost basis is reduced by the depreciation amount whether I take the deduction or not? So the advantage of not taking depreciation is when you sell, your gains are taxed at 15% instead of 25%?

Thanks again, this place is such a great resource!

Hello friends,

As I get closer to buying my first rental unit, I am thinking more about taxes. I know depreciation can be used to offset rental income. I have a few questions about what the government considers income, and what can be deducted from that income.

I think I can deduct things like:
Property taxes
Maintenance fees
Mortgage interest
Depreciation

I am not sure if I can deduct:
Repayment of mortgage principle

I believe rent paid to me is taxable income, and then I deduct the above items from that. Can I deduct the mortgage payments I make? If I am planning to use the profit to buy another unit, do I still have to pay taxes on it?

I think since I am trading that money for an asset that it will be taxed... I just want to make sure.

Thanks everyone.

Ali Boone

It sounds like you are doing just what I would like to do! It just seems like less hassle to buy a turnkey property.

I see your website, I will read up there and here, and in a few months I will be ready to buy.

Thanks a lot, I will probably contact you in the near future.

Marco Santarelli

Thanks! This is just what I wanted to know. The funds are free and clear, I have been directing a portion of my monthly savings into mutual finds to offset inflation.

I have a few questions mainly about financing. I am currently renting, would I be able to get a loan for a rental property? How would this affect my ability to get a loan for my primary residence if I choose to buy a house to live in a few years down the road?

And this is probably more of a personal decision I need to think about, but is it better to save my cash for a down payment on my own residence, or spend it on an investment property?

Anish I want to buy one house to start, and buy another when I have more money (1-2 years) and continue buying houses whenever I can afford another one.

Nechelle can you give me a few suggestions to read about private money lending?

Thanks for the answers everyone!

Hello all. I have money in mutual funds which have been doing fine, but if the market goes down again so does my money. I always thought buying a rental in San Diego (where I live) was out of reach and then someone told me I can buy out of state rental properties.

Is 30k enough to buy a rental property somewhere? I heard that there are companies that buy properties, put a tenant in them, and set them up with a management company and then sell the property. Since I don't have time to fly around the country and learn about different markets something like this seems ideal for me... a property with a tenant, ready to go.

What kind of companies do this? I've read through the real estate investment guide on this site for a light overview.

One other question I had is if that is not enough for a property, what about buying notes? People say they are passive investments, but what if the person stops paying their loan?

Thank you for any advice!