All Forum Posts by: Logan Allec

@Mark Abele Section 179 can now be very useful for small to midsize owners of non-residential buildings if they want to replace, say, the roof (thanks to the new tax law).  This is especially true if the building has been fully depreciated (no depreciation deduction) and/or the property is owned free and clear (no mortgage interest deduction).

@Harris L. "If I live in California any non-CA LLC (with or without a partner) that I directly own I have to pay the CA FTB $800."

This is not necessarily true. Obviously if a foreign LLC is registered in California, it's on the hook for the $800.

But if a foreign LLC isn't registered in California, the issue is whether or not the LLC is doing business in California.

And the mere fact that a California resident is a member of the LLC does not necessarily mean that the LLC is doing business in California.

If you, for example, while residing in California, perform in any capacity on behalf of the LLC, the FTB says that this LLC is deemed to be doing business in California and would subject to the $800 and tax filing.

However, if you are truly a mere passive investor with, say, a partner who lives in Georgia (for example) and manages the Georgia properties owned by the Georgia LLC, the Georgia LLC is not considered to be doing business in California and is not subject to the $800 and tax filing.

There are a handful of states where residency of a member/partner will trigger a filing requirement for an LLC or limited partnership, but California isn't one of them.

"and any LLC that my non-CA LLC owns even if the child non-CA LLC is a disregarded entity I also need to pay the yearly CA FTB $800 fee."

Not necessarily, for the same reason as above. The issue is "doing business." Now, if foreign child LLC were doing business in California, then foreign parent LLC would have to file and pay the $800, but not necessarily the other way around.

This is pretty basic stuff that any California CPA should know, so I'm surprised that yours doesn't.

@Tom Walrod Do you have a link to the Marcus & Millichap report?  I'd be curious to see what they said.  Note that if the report was put out at the end of 2017, the information in it could likely be very preliminary.  M&M is a brokerage, not a CPA or legal firm, so I would guess that some V.P. just heard the phrase "pass-through deduction" (this phrase is not in the tax code) and speculated that one would actually need a "pass-through" entity in order to take the deduction.

@Robin White If your question is whether or not rental income qualifies, then it likely will insofar as it is considered a "trade or business" (whatever that means...Treasury has never really clarified...).  But of course we're still waiting for official IRS guidance on this point.

However, you may not be able to take the full 20% QBI deduction if you are single with expected taxable income over $157,500 or if you are married with expected taxable income over $315,000.  Consult with a CPA if you're really trying to model this out.

@Tom Walrod LLC or not doesn't matter.

Welcome, @Andrew Williamson

SoCal can be a tough nut to crack for newbies.

A couple years ago I mailed out lots of letters to homeowners across LA County with no luck.

Then I tried rural Kern County and got a deal from a distressed homeowner in California City.

The margins were not as large as they would've been in LA or OC, but I was able to rent it out for 2 years before fixing it up and selling it for a decent gain.

Also, have you considered an owner-occupied small multifamily for your first deal?

You only need to put 3.5% down, so cashwise it won't get in the way of other real estate goals you may have.

My first deal was a 4-unit up I bought withFHA3.5% in Santa Clarita.

I lived for free (as opposed to paying rent) + enjoyed cash flow + built equity. It was a great investment (and still is).

Good luck!

@Nate Morris I agree with @Frank Chin The seller's LLC has no value to you. It's not like you're buying the Walt Disney Company with all its goodwill, brand equity, etc. You want the asset, not the LLC.

@John Ross Valderama Around here it means buying a 3-4-unit property, living in one of the units, and renting out the others, essentially living for free.

@Juan Lozano Good to see another Santa Clarita investor.

It's tough to say whether or not you'll need to file in Missouri without knowing more information.

Long story short, you may not have to file a Missouri return if:

• You are a nonresident with less than $600 of Missouri income; OR
• Your Missouri adjusted gross income is less than the amount of your standard deduction plus your exemption amount.

@Mark Forest In determining which method of deducting auto expenses to use, you really have to compare the two.  Knowing what other investors are doing won't really help you at all.

@KJ Tottle If this is capital you've earmarked for investing in real estate, I wouldn't drop it into an index fund.  By investing in an index fund, you run the risk of a market downturn and not being able to invest consistent with your plan.  What I do is move money around various bank accounts to get sign-up bonuses.