All Forum Posts by: Logan Allec

Welcome, @Bryon Walsh.  Always good to see other SoCal investors on the boards.

@Ricardo Velazquez Have you thought about getting into a 2-4 unit with low-down payment 3.5% or 5% down financing?  I got my first deal this way, and it was great!

@David Huynh Generally, expenses incurred to facilitate the purchase of real property are capitalized to the basis of that property.  So in your case it is very likely that you would not be able to deduct those expenses on your 2017 return at all but would rather keep track of them and add them to the basis of your property, which you will report in the year that it is placed in service.  Check with your tax professional about your individual situation and nature of your expenses.

@NA N Keith In order to qualify your rental activities have to be considered a "trade or business," which the IRS has conveniently never defined for us.  I would just be as active as you are comfortable with in your rentals and make sure you document your activity.

I have no idea whatsoever about your situation but given that you don't have any W-2 or other business income you may qualify as a real estate professional if you spend more than 750 hours a year on your rentals.

Check with your tax adviser.

@Allan Lim Yeah, people do this.  Hence all the questions pertaining to the "due on sale clause" around the forums.  Just search for that term in the searchbox, and you'll see what I mean.

However I can't tell you if it's advisable or not in your situation since I don't know your situation and I'm not an attorney.

Good luck.

@Lakshay G. To be honest I'm not very familiar with TurboTax, but if answering Yes to that question automatically generates a Schedule E for that property, you should answer it No.  However if there's an option where you can say Yes I purchased a property in 2017, and here are my costs, but No, I did not yet place it in service in 2017, that would be optimal.

@Gary F. You can only take the Section 179 deduction on a vehicle used more than 50% for qualified business use.

There is also bonus depreciation.

However I would say that if you are renting out rooms I'm not sure how high your business % could really be for a vehicle?  Standard mileage may be your best bet.

Also if you are renting out rooms in a house in San Jose,  after depreciation, you may be in a tax loss anyway.  But of course I don't know your depreciable basis.

In terms of apps, check out MileIQ.

@Lakshay G.

Congrats on snagging your first deal!

#1. I can't speak to this.
#2. Yeah, I'd imagine this is pretty typical.  I have a property with a small shed on it.  I rent it out for storage for an extra $50/month to the tenant.
#3. Yes, the typical practice for those who own property in their own name is to have the payments made out to their own name.
#4. Based on what you've described it sounds like you will have to capitalize your 2017 expenses to the basis of your property.  Also if you obtained a mortgage some of your closing costs may be amortizable.  Check with your tax professional.

Manuel Lam If you are a business owner there are some pretty awesome retirement structures you can set up to reduce your tax liability now as well as to grow your wealth tax-deferred (which makes a huge difference over time than paying taxes on your earnings every year). Or of course you could just take distributions out of your business and invest personally without respect to the business.

@Linh Do Great strategy. My first property was a 4-unit with 3.5%-down FHA financing. It was a great learning experience and continues to be a great investment! Good luck!