All Forum Posts by: Michinori Kaneko

Yes really hoping it's no.3 in my scenario but if it's 2 that would be really bad and even in 1 you are paying lots of tax payments upfront and you would have to depreciate the increased cost basis over 27.5yrs so would not be ideal.

Hello, 

I am trying to figure out the tax consequences on insurance payouts as I'm thinking about having a more tightly secured portfolio.

Lets say that the house has adjusted cost basis of $200k.  The options for insuring the properties are fair value approach or full replacement cost. The fair value you can insure for whatever you feel is fair value (let's just say $250k in this instance) and full replacement will cost $400k.  

If the house completely burns down, under fair market value approach the tax consequences are pretty easily determined by taking difference in payout vs the cost basis as the gain. However I'm wondering under full replacement cost, how this works out. Let's say the house was fully rebuilt for $400k. Under this scenario am I:

1) taxed for the excess $200k ($400k - cost basis) as capital gain and my cost basis is now $400k.

2) taxed for the excess $200k ($400k - cost basis) as capital gain and my cost basis remains as $200k.

3) not taxed for capital gain and my cost basis remains at $200k.

if it's either 1 or 2 I would almost steer away from full replacement cost since that would mean I am paying for a phantom gain that I will never realize (I would assume the fmv will most likely still be around $250k even if it was fully rebuilt with $400k of cost/labor).  Thank you in advance for your help! 

 who is your lender? can you please provide me info? 

I'd assume if its rented out by room then it has locks on every room sure, but how is that any different than student housing or other multi family houses?

Hi, 

I am in contract to purchase a SFH which was converted into a boarding house. Basically it was a 4B2B house which was converted into 5 bedroom apartment, where the rooms are rented out individually. I had DSCR lender (to whom I disclosed the situation upfront) who just told me (after I paid for appraisal and wasted several weeks) that no DSCR lender would lend for this type of property, which I don't understand why since student housing can be funded via DSCR and this is a very similar concept.

In any case, if DSCR is not an option (or maybe i just need a better DSCR lender), I need a different option for financing but I need a commercial loan because I do not want the loans to show up on my personal credit. The property will be purchased by a single member LLC (which I am the sole owner). Please let me know if there are any leads in someone who could work out a lending option for scenario like this. Thank you for your help in advance!

how did you financing the 1.94M? did you need to invest any additional cash for renovation? how much are you renting for? 

nice, are you looking to sell this property? what is it renting for?

That's great. what rent are you collecting, and how much are your cashflowing? what is your ROI?

Hi I wasn't planning on a house hack but I have a house that I'm considering renting out portion of it. It's not a multi family, it's a SFH. The question is on capital gains tax treatment when I sell the house down the line. I understand that when you sell your primary resident that you lived 2/5 past years you can get $500k deduction on your capital gains. I plan to rent it for few years then use the entire house as my resident when my kids get older and I need the additional space. My tax accountant told me that once I rent out a portion of the house that part becomes forever business property and while I can continue to take depreciation post rental period I will not be entitled to the capital gains treatment for that portion. Is this accurate? Is everyone that's house hacking paying capital gains taxes on portion they are not living in? Thank you for your help in advance