All Forum Posts by: Michael Lucero

You don't need any of that, it would be your personal choice. It would help shield you in a lawsuit if that ever occurred. If you don't own many assets, your chances of getting sued go down quite a bit. 

Im a CPA with rentals and i do my own taxes. 

I think your question is a little too vague to answer exactly but ill give it a shot. A lot of the tax situations depend on whether you are considered an active or passive real estate investor. When you are active (there is a strict definition of this in terms of hours etc) you can actually use all expenses or losses to offset your ordinary income; such as if you are a real estate broker and have rentals. Whereas if you are passive such as have a regular 9-5 and do real estate investing on the side you cant use losses on your rental to lower your taxable income from your regular job(to a certain extent). You can have a loss on your real estate rental even if you cash flow because of depreciation. Depreciation isnt an actual money cost but its an expense for tax purposes. Rental income is "tax advantaged" income because you can offset it by depreciation and other expenses to ultimately sometimes not pay any taxes in that income.

The other tax benefits are that normally when you buy something low and sell it high, such as stocks, you will owe taxes on the profit. However, with real estate, if you take that gain and use it to purchase more real estate, you can delay paying taxes on that gain(sometimes never having to pay it if you keeping buying real estate when you sell) through a 1031 exchange. This isnt only used in real estate but for the layman it may be the only place they use a 1031 and it is a benefit that isnt applicable to a 9-5 income.

Tax deductions for mortgages aren't really a benefit over anything comparable because anytime you have a loan for business whether its real estate or not, you can deduct loan interest on your taxes.

Wow that price is crazy compared to where i live. In southern california i pay $500 a year for a $370k condo. Location, house age, and Type of house i guess impacts it. Onviously dont compare to my price given all that, just thought it was interesting.

How you respond depends on who has the leverage in the situation and secondarily the price of rent. Is she easily replaceable or is she not ( a great tenant besides for this incident, pays on time, etc). Is the rent 10k a month with healthy profitIf or is it a 800/mo rent with a fridge really eating into profits. Ultimately if she isnt a good tenant and can be replaced quickly, you have leverage cuz you want her out, tell her she can use the fridge you decide or she can move. If she is great, go buy a new cheap one, especially if any legal and vacancy costs are more than the cost or a fridge.

all you are doing with a 15 versus a 30 is paying the loan down quicker at a slightly lower rate. Therefore, the only value or increase in net worth from doing this is the savings in interest between the 15 and 30 year loan, but at a huge opportunity cost of not investing the money elsewhere. If i had a 30 year mortgage at 4.15% costing me 1000 a month and a 15 year at 3.95% costing me 1500, sure over the life of the loan i would be savings .2%, but if instead i did the 30 year and invested the 500 difference at 6%+ then it will indoubtedly be more. 

Another possibility is that your calculation may be wrong if you are reaching the conclusion you are getting.

If you assume that you take the difference from a 15 and 30 year loan and invest at 6-8% then there is no way a 15 year loan would outperform a 30 on a net worth basis, its mathematically impossible if your mortgage rate is under 5%. A 15 year loan hardly makes any sense if you are willing/able and have opportunities to invest and earn 6% plus. If you dont invest the difference then the 15 is better, it's pretty simple. 

If you have a w-2 job and are not considered a real estate professional, but still invest in real estate (like a lot of people on this site), in most of the cases you will have taxes to pay at the end of the day. If you are a full-time real estate professional/investor, it is a lot easier to not owe any taxes because you can take the full losses on your tax return, unlike if you are passive with a w-2 job. You can carry forward those losses you were unable to take, and use them against future passive income or gain if you sell your entire interest in the property.

congrats, $500K at 30 is pretty good by any stretch, on that salary, that's extremely good. I'm sure the great appreciation market has helped some but nonetheless, it's due to the action you took!

congrats, that 1,025 rent on a 45k house with limited service is pretty good!