All Forum Posts by: Lahiru S Hettiarachchi Gamage
Lahiru S Hettiarachchi Gamage has started 3 posts and replied 8 times.
Quote from @Justin B.:
Same here! I'm looking for MFH's in the Memphis, TN area.
Hi all,
I live in Memphis TN. It would be great to meet any wholesalers in here.
I have 2 properties here and I'm looking to buy, fix and hold another.
Thanks.
Post: How to get the tax advantages against W2 income
- Posts 8
- Votes 6
Quote from @Benjamin Weinhart:
Hi Lahiru,
Great question, if your wife has been considered to meet the threshold for "Material Participation" in the business, then you would be able to take these losses. There is also an up to $25,000 allowance if she doesn't quite meet the material participation threshold, but is still considered to actively participate. This allowance does have a phase out related to your income, so it would vary depending on you and your wife's specific circumstance. IRS Publication 925 goes into more detail about this.
If you aren't able to qualify for either, you still do get advantages in that you would be allowed to carryforward these passive losses to a future year to offset future passive gains. These are reported and "retained" on IRS Form 8582.
Of course, if you are unsure or would like additional guidance in determining what might fit your specific situation, please reach out to a CPA/Tax Professional who may be able to assist. Thanks!
Fact that I can keep these expenses reported and "retained" on IRS Form 8582 is something new for me. I think this is the best way forward since it is hard to prove "Material Participation".Thanks a lot.
Post: How to get the tax advantages against W2 income
- Posts 8
- Votes 6
Thank you all for detailed responses.
Post: How to get the tax advantages against W2 income
- Posts 8
- Votes 6
Hello,
I own 2 rental properties with a partner and also have a W2 job. My wife doesn't work but doesn't have a real estate agent license. She work on the rental properties in many ways. But her name is not on the properties.
As I understand, we don't get any advantage in the real estate losses against my W2 income. Are there specific conditions that are required to claim a loss for my wife since she worked on rental properties?
Thanks.
Post: Cash-out refinance after cash deal
- Posts 8
- Votes 6
Everyone,
I (and a partner) got a property offer accepted for a cash deal. Now we are looking for cash out finance option. It looks like we have to wait 6 months as a requirement(having title to name).
We are doing it for the first time. Anyone experienced with that before have any tips?
Thanks.
Post: Getting started with real estate
- Posts 8
- Votes 6
Quote from @Julio Gonzalez:
Hi Lahiru, you came to the right place for information.
Wishing you the best and plenty of success!
THanks Julio for the wishes.
Post: Getting started with real estate
- Posts 8
- Votes 6
Quote from @Andrew Freed:
@Lahiru S Hettiarachchi Gamage - If the property is negatively cash flowing 400 a month, why are you keeping it? Does it have equity in it? Can you sell it and make a profit? I wouldn't be keeping a rental that cost me money each month, thats not investing.... thats spending.
If I were you, I'd consider 1031ing that or selling the property and transitioning that into a multifamily or something that actually makes you both money each month. You will realize quickly that you will max out the amount of properties you can buy if you keep picking up negatively cash flowing properties. Lastly, and most importantly, you will be more tied to your W2 job if you keep picking up properties like this since you will need the income to cover the overhead of your "investments." The goal is to reduce your reliance on your W2, not increase it.
Thanks for the detailed information. Really helpful. I meant the $400 is HOA fees. Cash flow is around $75(+ve) without considering maintenance. 1650 - 400(HOA) - 1050(mortgage) - 125(property management).
I hope that the maintenance will be less after the initial fixes since the outside is covered by the HOA.
Similar properties are now selling for $195K, so I think it is possible to recover the expenses if we sell.
You provided great input. I don't like the fact that our $65K is stuck on this property. I also want to learn about 1031 (and will watch some videos on that).
I also missed some rent since we lowered the price too soon. Otherwise, it could have been rented for around $1750. So there is a chance that this can make the cash flow positive.
We can buy the second property without selling this, but I am keeping the options open as I accumulate knowledge on the space to make better decisions.
Post: Getting started with real estate
- Posts 8
- Votes 6
Hello everyone,
I work with a 50% partner (my friend) on real estate deals. We got our first property, a condo, last year for $174K and spent around $12K on renovations, which we did ourselves. We have rented it out for $1650. Currently negative cashflow due to $400/mo HOA fees, maintenance, etc.
Now we are looking to buy our second property with cash. We are planning to tap into the equity in our homes with HLOC. The plan is to get a discount and then go for a mortgage. Any feedback is appreciated.
Thanks.