All Forum Posts by: Logan Allec

The biggest mistakes landlords tend to make on their tax returns generally have to do with fixed assets / depreciation...the 3115 can be a godsend in these situations...great post!

You need to make sure that this information is either in your latest tax return received from this preparer or she has provided it to you separately. Is there a depreciation schedule in your last tax return package? What about a carryover schedule? Form 8582 (along with supporting schedules) for any passive activity losses that were limited?

If you earned most of your income say in Q3 you can show that on Form 2210. So the IRS would expect in that case smaller estimated tax payments for Q1, Q2, and Q4 and a larger one for Q3.

There is a safe harbor for you…it’s just 110% of prior year since you’re over the $150,000 AGI.

You can also base on 90% of current year’s taxes to avoid the underpayment of estimated tax penalty.

Keep in mind you can use Form 2210 along with your return to show the IRS how much income you earned by quarter and make your estimated tax payments accordingly.

@Micah Freeman Greetings.  I'm a former 4-unit house hacker here and a CPA.  Basically, the units you're including on Schedule E are only the ones you're renting out, so it sounds to me like those units were rented at fair value for 164 days (I'm assuming that tenants were already in the units when you bought it) and those units were used for personal purposes for 0 days.

@Ellie Narie Congrats on the househack.  I househacked a 4-unit myself in my 20s.  I still have it today and it provides great income.

For your first question, let's back up here.

Your depreciable basis is based on what you actually paid for the property; it's the purchase property plus or minus some items on the closing statement as well as any costs you paid outside of escrow that you can include in your basis.

That number is completely independent of what the tax assessor says or what the appraiser says.

When people say to use the assessed value, they're referring to the allocation between land and building.

I think you get this but just want to make sure.

Now, you don't have to use the assessor's allocation if you can come up with some other reasonable allocation.

In my view, using the appraiser's allocation is reasonable.  You could also do some more digging...was there a similar plot of land that sold around your property for $100,000 and you paid $400,000 for your property (land and building)?  In that case it may be reasonable to allocate 25% land / 75% building.

That said, the IRS likes using the assessor's value and will often challenge other methods.  Sometimes they win, and sometimes they lose.  There was a Tax Court Summary Opinion a few years back (Nielsen) where the Tax Court sided with the IRS who wanted to use the county assessor's allocation, while the taxpayer depended on alternative methods I described above.

Also keep in mind that because you're living in one of the units, you can't depreciate the entire property for rental income / loss purposes -- only the amount attributable to the portions you're renting out.

As for the points, again, you must allocate between the points allocable to your residence portion of the property and the rental portion of the property.  The former are generally amortize as an intangible asset, but you may be able to deduct them in full as prepaid interest in the year you pay them if you meet certain requirements and you itemize deductions.  The points allocable to the rental portion should be capitalized as an intangible asset and amortized over the length of the loan.

I've always felt that travel insurance was a rip off, but I've recently heard some stories that made me think twice.  I'd like to hear from the insurance pros out there if they honestly feel that travel insurance is a good buy in certain circumstances / for certain people / for certain trips.  Thanks!

Obviously there are life hacks that we as landlords pick up over the years — how to negotiate with people (e.g. contractors) who want to kick you around, how to buy inexpensive yet durable flooring, where's the best place in town to get rid of crappy furniture, etc.

Does anybody else have some good ones?

@Dave Toelkes I doubt she'll be in AMT (thanks to the new tax law).

@Jason D. Assuming the LLC is treated as a disregarded entity or a partnership for income tax purposes, then this transfer should be income tax-free under Section 721. However if the LLC is a partnership for income tax purposes, then the LLC will have to track your built-in gain separately and account for this when doing the allocations / preparing the K-1s, which can get very complex. As @Jason D. said, consult with a qualified tax advisor.