All Forum Posts by: Lance Lvovsky

@David Wilkes

Disclosure: Anything I write here is for informational purposes only and does not constitute tax advice.

Yes, the interest income is taxed as ordinary income.

As to your question regarding the LLC, if the LLC is in the business of making loans, then the interest income will be reported on Schedule C since that would be "trade or business" income. If the LLC is not in the business of making loans, then interest income is reported on Schedule B. Whether or not the LLC is in the business of making loans depends on the facts and circumstances of your specific situation.

With that said, the Schedule C would only report the "trade or business" income that pertains to said LLC. Hope this helps.

Answer is it depends. Most land trusts are structured as Revocable Trusts which means that banks should allow to finance it (Fannie guidelines). As such, the language of a Revocable Trust generally does not afford creditor protection. I would definitely have an Attorney review any Trust documents. If you are doing it to hide your name, then you cannot be the trustee. Otherwise you won't be hiding your name

While it is certainly important to have a CPA who invests in real estate, I wouldn't necessarily limit yourself to just a CPA in your area. Most of us CPAs work with clients around the country

Welcome to the forums! Be like a "sponge" and learn all you can!

Interest income will be reported on Schedule B. Even if you provide the loan from your SMLLC, the interest income will still flow to Schedule B (same as if you were to loan him funds from a personal account").

One is not more tax efficient than another. Now if you had a Self Directed IRA for example, then you would have an opportunity to either defer taxes (traditional IRA) or earn income tax free (Roth IRA).

@Michael Strauss To answer your question, it is best to get a CPA who invests in Real Estate and understands the industry. In addition, a CPA who can provide business advice in addition to tax advice will go a long way. You need someone who can provide sound financial planning while also incorporating any estate planning you may desire.

First question I would ask is whether they invest in real estate. Also important to know whether the CPA understands the differences of investing in an entity vs an individual name. Lastly, in my opinion, it is good to go with a CPA that knows trust and estate planning, as both are areas that eventually most real estate investors need to take into consideration

To answer your question, it depends. If this is a gift, then quit claim deed. But I recommend you speak with an attorney who knows your local legal laws when it comes to transferring real property. I will also share with you some additional info. If the asset is a low basis asset and has appreciated significantly, keep this in mind: your basis in the asset will be your grandparents basis, if this is a gift. If the asset passes to you from their estate, then you will get a step up to fair market value. Something to consider as you evaluate your options

Cost basis is what it cost you to build. Refinance was likely based on fair market value. So no, it is not based on refi amount

Get with an attorney to help you navigate the legal side of the issue. Get with a CPA to help you explain the differences between an asset purchase vs stock/member interest purchase. Generally, the buyer side of the transaction prefers to buy assets, not stock/equity