All Forum Posts by: Michael Plaks

@Marquest Page

You're saying you already have a double closing scheduled next week. I assume that you're a wholesaler on this transaction. If this is correct, then retirement accounts cannot be involved in this deal. Two reasons:

1. Your IRA/401k would have to be who the purchase contract was with. By now, the contract is signed with you personally. Too late to change that.

2. Even if you did structure it originally with your IRA/401k, your assignment fee would go into your retirement account, and you would have no access to this money, other than to reinvest into the next deal. Cannot pay your bills with this money. And I presume you're working on generating some spendable income.

IRAs/401k (especially 401k) are excellent tools for tax-beneficial investments, but you need to devise a strategy first. You need a real estate savvy accountant.

Congrats on your successful deal. Many more in 2018!

PS. Even as is, retirement account could possibly help you with your 2017 taxes. Again, find a good tax accountant. There're quite a few of us here on BP.

I don't think the answer exists as of now. The language of the bill is not clear on this, at least not to me. Could be interpreted both ways. My interpretation is based on the general intention of this reform to avoid retroactive application. In multiple instances, they specifically protected transactions consummated before the bill was finalized. 

People who converted to Roth in 2017 did so in expectation that they could recharacterize, up to extended deadline of 10/15/18. If recharacterization of 2017 conversions is prohibited - it would seem to be an instance of retroactive application. That's why I hope that the new law applies to conversions after 2017, not recharacterizations after 2017. But I can't be sure. I'm pretty sure that ultimately we will have Regs clarifying it.

As of today, I agree with you: it is safer to recharacterize conversion that already lost money, before the year ends.

@Ashish Acharya

I probably don't agree with not converting to Roth or reversing the conversion already done. What if I expect a higher income next year, for example? I can also split the conversion between the two years, reducing the combined tax hit.

The way I interpret it is that recharacterization of 2017 Roth conversions is still allowed. Otherwise it would be essentially a retroactive application. But I'm not sure, and the future Regulations should clarify it eventually.

@William Behm

It is progressive, and first $500k is ignored. Your understanding is very good.

@Dmitriy Fomichenko - 

@Ashish Acharya was talking about estimated property taxes, not estimated income taxes, I believe. The word estimated may be confusing in the context, but some state and local taxing authorities have not issued final bills yet.

And the benefit is to use the deduction this year, before the new limit and the new doubled standard deduction kick in.

@Ashish Acharya

@Dmitriy Fomichenko - thanks for the mention, colleague

@Ronnie Howard - you're in Houston. The best way to get educated is thru the local company, Quest IRA. They constantly run free classes and free investor socials.

@Mark Webb - done

Fragments from my blog post. (Sorry, BP won't let me link to it, but you can google it)

Pre-pay 2017 property taxes on your personal residence.
This is not an absolute rule, but it should be a wise move for most people, not just investors. Because of the new law, you may lose the tax benefit of property taxes on your homestead. So make sure the bill is paid in 2017.

Defer business income into 2018.
If you’re about to get paid before the New Year, you may want to wait a few more days. Not only this income will be taxed one year later, but it might be taxed at a lower rate. Of course, your mileage may vary – it’s IRS taxes.

Accelerate business purchases into 2017.
You will get the business deduction in the current year, plus you might get bigger savings this year than in 2018.

If moving – pay for the move now.
Business-related long-distance moves will not be deductible after this year.

Make your 2018 charitable donations now.
They might get you less (or even zero) benefit in 2018.

Accelerate miscellaneous personal expenses.
The new law eliminates the so-called miscellaneous personal deductions. The last days of December is your last chance to score a tax benefit from them.

@Patrick Ng

You will probably get more help if you post this on one of the Financing forums here at BP. This is legal & tax forum.

@Clancy Catelli

There are two methods. One is mileage allowance, and the other is percentage of actual expenses, including depreciation. BOTH methods require tracking miles, unless the vehicle is 100% business. You need miles to establish business use % for the actual expenses.

I'm not allowed to link it here, but find a half-hour webinar about deducting auto expenses on my YouTube channel.