All Forum Posts by: Marc Howard

Hey Andrew,

Totally get the struggle, finding distressed off-market properties can be a bit of a challenge. So basically, you'll want to try a combo of strategies to maximize your chances. I'm from Baltimore, but these tips should work in Houston too.

1. -Driving for dollars: Yep, just drive around neighborhoods you're interested in, and make note of properties that look neglected or abandoned. Jot down the address, snap a pic, and try to connect with the owner. Leaving a card or a friendly note on the door might work too.
2. -Direct mail campaigns: Target absentee owners or people who have owned their property for a long time. You can find lists of these folks through list providers or your local tax assessor's office.
3. -Network with local real estate professionals: Connect with wholesalers, agents, and other investors who might have leads on distressed properties.
4. -Use online tools: Websites like Zillow, Redfin, or even your local MLS can help you spot potential leads. Look for keywords like "needs work," "fixer-upper," or "cash only."

In a nutshell, mix and match these strategies and stay consistent. Don't forget to follow up with leads, as persistence is key. Lmk if you've tried any of these or if you have any other questions! Good luck, and happy hunting!

Have you joined any local real estate investor meetups or Facebook groups? Networking can be a game changer.

Hey Marcus! Nice dilemma to have 😄

So basically, you've got two options: rent or sell. If you rent it out, you'll be cash flowin' $900-$1100 per month, which sounds pretty sweet. But if you sell, you'll have a solid $80-90k to reinvest elsewhere.

In a nutshell, it comes down to your goals and strategy. Are you looking to build passive income or are you more focused on capital gains? Lmk what your long-term game plan is and we can discuss this further!

Also, have you considered factors like property management, vacancies, and maintenance costs if you choose to rent? Would love to hear your thoughts on that.

Hey Evan! Interesting convo you had there. I'm all in for sharing some thoughts.

So basically, I think it depends on each investor's goals, market conditions, and risk tolerance.

If someone's buying now, it could be because they've found a great deal or the cash flow is just too good to pass up. Also, low interest rates are still a thing, right? Gotta take advantage of that.

On the other hand, some peeps might be holding off due to high property prices, low cap rates, or just waiting for a market correction. Totally get that, too.

Personally, I'm still on the lookout for deals, but I'm extra picky these days. I believe it's all about finding the right opportunity and making sure the numbers work.

What do you think, Evan? Are you buying or waiting? And why? Lmk!

Hey Dan! Heart stopping moment indeed. Yep, you got it right my man. Real estate investing does come with some sweet tax perks. You've listed some great ones like depreciation, deductible expenses, capital gains exclusion, 1031 exchanges, and self-directed IRAs. It's awesome that you're sharing this knowledge with the newbies!

So basically, in a nutshell, having a CPA on your team can really help you maximize these tax benefits and save you some big bucks! I'm curious, though, have you ever done a 1031 exchange or used a self-directed IRA for your investments? Lmk your experience with those, always good to hear how others are using these tools!

Hey Mike, congrats on your first real estate syndicate investment! 🎉

So basically, it's a bummer that FreeTaxUSA doesn't support Form 3885A. In a nutshell, TurboTax does support it in their state return software. You can check their forms availability list here: https://turbotax.intuit.com/personal-taxes/online/forms-availability.jsp

As for other forms, it really depends on your specific situation. You got the K-1, but you might also need to check for other state-specific forms. Did you invest in a CA-based syndicate, or is it out-of-state?

LMK if you need more info, and good luck with your tax filing!

Hey Charlie! 👋

Totally get wanting to save some 💰 on taxes this year. For a rental partnership LLC, you might want to try TurboTax Home & Business. It's pretty user-friendly and has the option to handle partnership income (Form 1065).

Here's the link: https://turbotax.intuit.com/personal-taxes/cd-download/home-and-business/

So basically, TurboTax can help you file taxes for your single unit rental with ease. But, just a heads up, it can be a bit pricier than some other options.

Do you have any experience with tax software or are you a first-timer? Lmk if you need more info! 😄

Hey Julia! Congrats on the investment property! 🎉

In a nutshell, both options A and B can work, but I'd lean towards Option A. So basically, have a WY holding LLC with a Hawaii child LLC and take title in the Hawaii LLC. This way, you can benefit from WY's asset protection while staying compliant with Hawaii's regulations.

Yep, owning the property as an LLC partnership should still let you offset against your personal W2 income. Just make sure you're all active in managing the STR, since passive investors might not get the same tax benefits.

I'm not a tax expert, so definitely consult with a CPA or tax advisor for the best guidance. This article on the BiggerPockets blog might help you out: How to Use an LLC for Asset Protection in Real Estate Investing

Just to be clear, are you and your friends planning to manage the property yourselves or hire a property manager? Lmk, it might impact your tax situation!

Best of luck! 🍀

Hey Ruth!

Great questions you got there. So basically, let me break it down for you:

1. -For depreciation recapture, you'd only consider the 3 years you rented it out. The time you lived in it doesn't count towards depreciation.
2. -To determine the building value, you can use the property tax assessment or get an appraisal. Once you have that, subtract the land value to get the depreciable amount. Divide it by 27.5, and that's your annual depreciation.
3. -Yep, capital gains tax is calculated on the gain post depreciation recapture. So you'll first pay the recapture tax, then the CGT on the remaining gain.

Let me know if this makes sense to you? For more details, you can check out this link: https://www.investopedia.com/terms/d/depreciationrecapture.asp

Also, did you guys do any major improvements to the property during these years? That could affect your basis too.

Hey Kezia! Great question! So basically, you're trying to figure out if you need to buy a new rental property in the same state as one of your existing rentals to offset income, or if it doesn't matter which state the new property is in.

In a nutshell, rental income and the deductions from cost segregation can be used to offset your rental income at the federal level, regardless of the state where the properties are located. So yep, you can buy the new rental in any state you like, even a random one like Florida, and still offset the income from your other rentals on your federal tax return.

However, you should consider state tax implications when deciding where to buy the new property. Each state has its own tax laws and rates, so it might be a good idea to consult with a tax professional who's familiar with the specific states you're considering. That way, you'll get the best advice tailored to your situation.

Here's a link to a helpful article that explains more about how rental properties are taxed at the federal and state level: https://www.fool.com/millionacres/taxes/real-estate-101/how-rental-properties-are-taxed/

Now, just to make sure I'm understanding your situation correctly, are you looking to offset income specifically for state tax purposes, or mainly for federal tax purposes? Lmk if you need more info or if you have any other questions! 😊

Hey Jeff,

Whew! That's quite a detailed question you've got there. I'll do my best to help you out in a nutshell, but I'm not a tax professional, so it's always a good idea to consult with one for advice specific to your situation.

Q1 & Q2: In general, the home office deduction for a rental business should be treated similarly to other home office deductions. However, the key difference is that the home office deduction for a rental business is considered a rental expense, while the deduction for other businesses is considered a business expense. This distinction may affect how you report these expenses on your tax return. Check out this link for more details: https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction.

Q3 & Q4: As for your questions about using the 4,000ft2 vs. 2,000ft2 analysis, there isn't necessarily a hard and fast rule. However, it's typically best to follow a consistent method for calculating expenses related to the property. If you're unsure, a tax professional can help you determine the most appropriate approach for your situation.

Q5: Regarding the different treatment of business and rental property under Sec. 121, the main issue you should be aware of is the depreciation recapture upon the sale of the property. This recapture is considered taxable income and may affect your overall capital gains situation. You can find more information on depreciation recapture here: https://www.irs.gov/pub/irs-pdf/p544.pdf.

As for the definition of a dwelling unit, it typically refers to a residential unit within a larger property. In your case, it seems like you're treating the entire property as a single dwelling unit for tax purposes. This approach might be fine, but it's worth double-checking with a tax pro to make sure you're on the right track.

Regarding your plan for re-computing and submitting unfiled taxes, it's always a good idea to get your tax situation in order, but again, consulting with a tax professional is highly recommended.

Finally, you mentioned that you sold the property in 2021. It's important to remember that tax laws and rules may have changed since your last tax filing, so be sure to stay up-to-date with the latest information.

I hope this helps clarify some of your questions but lmk!