All Forum Posts by: Kristina Jensen

Those replies are helpful.  I'll search BP for the methodology mentioned by Mr. Plaks.

But how do I deduct a plane fare for the business portion?  Do I divide the total fare cost by the number of days that were business and personal (1 of 7)?  The plane fare costs the same regardless if I stay a day or a month.  This seems easier with meals, hotels or rental cars where there is a per day cost that is easily calculated.

Also, not to create an awkward situation, but it seems you both have a different take on whether the value of reward points are deductible (I spent ~21,000 points on Southwest and the ticket purchase would have been ~$250).  I'll also ask my Enrolled Agent what his take is.  Thank you both very much.

I have out of state properties that I visit 1-2x per year to either have a meeting with the Property Manager or conduct a walk-through if there is no property manager.

If I use reward points for the flight/hotel/rental car, am I able to apply the value of those points to my taxes for the travel? I took a screen shot of the dollar cost of the airline ticket along with the point requirement, but not sure how this scenario works.

I have family in these same towns, so I typically only deduct the plane fare (no hotels, gas, meals, etc.), since the business aspects are completed in a single day and I usually stay for a week.

Thanks for all the replies.  Here are the stats to help others learn where I faltered.

Purchase of 1958 (never remolded) SFR with basement/1st floor in good neighborhood, 1350sq/ft. 225k

Gut job and rebuild during COVID: 200k w/improvements (finished basement, shed with insulation & power for office, no builder quality items used, rear deck).  Total investment - just over three years, many years of life taken off, and home would probably appraise around 400k (25k in the hole for all that labor/mental stress, NOT WORTH IT)

My takeaway as an amateur. 

1) a deep renovation is a bad idea.  I should have razed the building and built new or stuck with light renovations.  The time it takes a builder to work with a structures framing and CMU basement that are not plumb, square, true, flat or waterproof is more costly than rebuilding with current building codes and engineering.

2) Take the time and cost you think it will be and multiply by 3 and 1.5

3) contractors will fail you again and again.  WRITE YOUR OWN SCOPE OF WORK and make them sign that instead of the nebulous one they send you.

4) Demo'ing asbestos and lead is time consuming and costly.  I'll buy 1978+ in the future

Your mileage may vary, but those were my revelations.  An expensive education

It is an owner occupied (primary residence) conventional 30 year loan.

Scenario:

You buy an owner occupied property, then immediately start a full gut job renovation.  Depending on permitting delays, labor/material shortage, COVID related delays, inspections, actual work conducted, etc., you don't actually move into the home for a year while making your payments.

I wonder if the bank would execute the DoS clause either because 1) if they visited during demo/construction, their initial investment has lost value, or 2) you haven't move into the home yet.

Does anyone have insight on this?  Thank you.

I won't argue one way or another. I'll simply ask readers to put themselves in a scenario:

You've amassed $500,000 in a retirement account after decades of working at a W2 job for 40 years. At 62 you encounter a debilitating disease that requires you to be in a nursing home. You can either "man up" and spend $250 per day to receive long term care which will dissolve your nest egg in 5 years, which will then leave you on social assistance, or you can spend around 12k to shield it (hide it) and protect your nest egg.

I anticipate most would shield their assets despite prideful talk to the contrary. Personally, I would consider all of those people who squandered their money over the years while I toiled away at saving, and would not think that those people receiving taxpayer benefits would be "just" or “right” either when they needed long term care at the tax payer cost.

Just another respectful consideration from someone who doesn’t really understand the LTC costs or Social Security benefits. But why not offer an inexperienced opinion? That’s the majority of the people reading, no?

Before you say that there are LTC insurances, they are expensive, and run out of money after several years.  They aren't iron proof or designed to eliminate your obligations.  Thanks everyone for the insightful dialog.

I will be renting out my SFR that I have lived in for the last 3 years. It is in an "A" neighborhood, and anticipate my current neighbors won't be thrilled. There aren't many renters in the area, and while we all know many great renters that would give you the shirt off their backs, there is a negative stereotype about renters that exists.

While there is nothing they can do legally, I like my neighbors, want to have a good relationship with them (they have my number, and would likely text me if the renters are causing havoc, for both their benefit and mine).

Have any of you experienced this, or have any tips on how to "break" the news?

Also, do you typically give your number out to the neighbors of where you have your home for such instances?  I'm assuming you're more likely to do so in a A or B than C or D.  Thanks!

 Is there a difference between paying the mortgage down faster to increase buying power, and simply saving that extra payment in a checking account to increase buying power?  Either way, it seems to me like the same thing?

This is very sad indeed.  You're human after all.  My tenant has fallen 3 months behind (total) over the last 6 years (and remains behind to this day).  A few days ago he asked for another couple weeks for the rent due to a sob story (wife in hospital, rare disease, doctors unsure, etc.) but I had had enough.  I simply never replied to him and within an hour he told me "Never mind I was able to borrow the money."

I should probably hire Thomas S as a PM to do what I do not!

I think he likley always had the money, he just prioritized other debts ahead of mine.  I think the majority (not all) of people who say they can't pay really can.

I think about the following when given a situation like yours:  If you give them the free rent, then why not head down to the local shelters and find other disadvantaged people and offer them free rent as well?  It would be just as fair, no?  I'm sure there would be a woman with a child that was abused by a husband that would love to get out of there.  Equally sad and equally not your responsibility.

It's a heart wrenching decision, but one that I think needs to happen sooner than later.

My recommendation?  Do the leg work for them online and see what benefits they can receive.  If they are like my grandparents, they would never find the resources on their own, not even after weeks of searching.  That way your conscious is clear(er).

Hi Nick, first a plug for you to all the members reading this string.

I went to your website, and want to let the other BP members know that you have a very professional and helpful site.  If you haven't gone there, please do so and check out his Blog space.  Great informative articles that I can understand.

And now, for 2 straightforward questions!

1. I am eligible for (and invest) $18,500 a year into my employers 401k.  Am I able to invest only half into this traditional 401K and half into a self-directed 401k?

2. Can I take the tax deduction on my fathers house?  I have paid for everything related to the initial purchase, upkeep, and monthly mortgage payments, but I am not on the loan or title.  I do live there as well.  I did a little research already and found the following:

It is not required in every case for you to have a true debtor-creditor relationship with your lender to take the mortgage interest deduction. Title 26 Code of Federal Regulations section 1.163-1(b) provides, quote “interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness.”

In English, it means that you may deduct the mortgage interest you paid so long as you are an owner of the property, even if you are not specifically named on the loan.

Thanks Nick.