All Forum Posts by: Namal Burman

Quote from @Bill B.:

You need a cellphone and internet to run your rental business right? Obviously your cellphone, monthly service for internet and cell service are deductible  probably either an IPad or a PC if you’re placing ads and screening tenants.  Are you deducting mileage driven if you’re self managing? You should have an umbrella insurance policy to cover your assets incase you get sued.

You don’t need an llc to deduct those things, and they would just add another $800 llc fee in California. 

You might want to check how much equity you have brining in how much income. You could havea. Good COC or ROI and have a terrible ROE. If so, you use that equity buy more rentals or generate more income.

Would your current primary home make a good rental if you bought a new primary? Could you sell your primary tax free and do a 1031 of one of your rentals to buy a very nice duplex?

It might be worth a few hundred to show your last return to a CPA that deals with realt estate, especially in California, and see if they think they can save you more than they charge.

You made good purchases in a great place and let time perform its magic. 

If San Diego wasn’t in California I’d live there tomorrow. 

For ROE if i take out equity don't i have to refinance the loan. I have current loan at low interest rate so not sure with current rates refinance will make sense

Quote from @Katie Balatbat:

@Namal Burman

Definitely I would echo that a good CPA knows the rules and options and limits more so than Turbo Tax.  Turbo Tax can be inaccurate or ask leading questions that if you don't know what you're looking for to verify accuracy, it can be tricky.  You also may want to look into bonus depreciation options.  If you need referrals in San Diego, let me know.

*This post does not create an attorney-client or CPA-client relationship.  Readers are advised to seek professional advice.

Thanks Katie,
Can you please provide me any recommendation for CPA who is well versed in Real Estate? I already filed my 2022 return on April 18th but since Oct 18th is the deadline i can leverage that and refile it.

Quote from @Bill B.:

With only two rentals I have no idea how you're showing a taxable income unless they are both paid off or at least purchased 10 year ago? Or are these not in California? Depreciation usually eats up any taxable rental income for the first 10 years. With only 2 properties to allocate cell service, internet, umbrella insurance, home office, tax/legal services, LLC fees, etc etc. Usually you can show a paper loss.

If this is all in a low cost Midwest market ignore this post, your profile says CA and you didn’t say they were elsewhere. 

Thanks for the response.
Yes all are in San Diego, CA. The first rental (Condo-my primary residence then in 2009) and later in 2013(move to townhome in 2013 from condo) and again in 2021 moved to single family. So Condo and townhome are rentals now. None of them are paid off. Condo is in FHA loan(5/1 ARM) and second one townhome is 30 year fixed low interest rate.

I am full time employee at one of the local company in San Diego so was not aware that i can claim deduction for below items?
(allocate cell service, internet, umbrella insurance, home office, tax/legal services, LLC fees, etc etc)
Any feedback you can provide that forming an LLC can help me? I usually manage both my properties myself with W2 pay. Not sure other then depreciation(I always have been using TurboTax) and maintanence(HOA) i can deduct anything from the rental income.

Quote from @Ashish Acharya:

Are you taking any depreciation? If normal depreciation is not helping you, have you looked at cost seg? 

Thanks for the comments.

Yes i used turbotax to compute the depreciation. What is cost seg? any pointers i can get and read and learn about it

Quote from @Randall Alan:

@Namal Burman

My advice to you is to understand how people versus companies are taxed.  W2 "people" are taxed on all their income that isn't filtered out to tax deferred accounts like 401k's, etc.  Companies, on the other hand, are taxed on the profit they make AFTER subtracting all their expenses.  By creating expenses for your company, you reduce your taxable income for your business.  Things like:  Allowable Car expense (the % you use for business), gas, car insurance, cell phone expense, 50% of business meals, business insurance, and so on.  All those things come off the bottom line before you are taxed on your remaining business profit.  There is the obvious expenses of depreciation, real estate taxes, mortgage interest as well, but presume you know about those already.  Improvements to your properties can either be expensed or depreciated over time depending on their size.  Likewise, equipment and supplies you buy for your business also fit into those categories... be it a pressure washer, or a new roof, or what have you.

Buying another property doesn't help until it is available for rent.  So if you bought it in 2023, it would not help you for 2022, for instance.  I will suffix my post with the fact I'm just a landlord and not a CPA... so the CPA types will probably have more information for you.

Hope some of it helps!

Randy

Thanks for your feedback.

 Yes i was thinking whether buying another property and renting it out will reduce my total rental income?

Regards,

namal

I have two rentals along with primary residence in San Diego,CA. Now the rental income is increasing my tax burden as an income.

Any strategies i can use to reduce this rental income and building more assets on the way?

Should buying another property would help? Any pointers or guidance would help?

Regards,

namal

I have two rentals along with primary residence. Now the rental income is increasing my tax burden as an income. 

Any strategies i can use to reduce this rental income? 

Should buying another property would help? Any pointers or guidance would help?

Regards,

namal

Hi,

I stay in Del Sur in one of the townhome(2300 sq feet , 4 bed /3bath) and the property is in overlooking a canyon with killer views and i own the property. Bought the property from the builder at year 2013 and now have a great equity on it. I have a mortgage 30 year fixed at 2.5% currently for the townhome. We want to upgrade to a single Family within Del Sur( yes MelloRoos Sucks but kids goto nearby schools and don't want to move for atleast 7-10 years away from Del Sur) .The cost of the new home we want to purchase in Del Sur may go above >1.5 Million. Need guidance regarding :

1) Whether i should sell the current townhome and put the equity from the current townhome it for 20% down payment for the new home purchase and invest the rest of leftover ?

2) Rent out the current townhome and put 20% down payment( yes i have saved 20% down payment alongwith some emergency funds) for the new if found single family home in DelSur costing above >1.5M?

Also i own one 2bd/2bath rental  and maintain it myself in Mira Mesa so i have some experience as a landlord. So if i rent the second townhome i would have 2 property as rental while 3rd one will serve as primary residence.

Please comment as you folks have more experience and i would appreciate your feedback.

Thanks,

Namal

Hi,

I stay in townhome in Del Sur(Own the property) from 2013 onward and love Del Sur a lot. Also my townhome is a jewel in the area overlooking the canyon with a decent backyard and sideyard which is rare in Del Sur for a townhome.  We want to move for a bigger home single family which is going around ~1.5 M in Del Sur and my budget is around ~1.5 M and in kind of dilemma whether its worth buying a single family in Del Sur and pay the MelloRoos or should look in Older Carmel Valley where no Mello roos. Catch is Carmel valley $/square feet is high compare to Del Sur but Del Sur has MelloRoos. We want to stay with PUSD(Del Sur/ 4S ranch) or Carmel Valley School.  Also new Carmel Valley homes are above $1.5 but don't like the way they have been packed together. Older Carmel Valley house seems old and not nicer then Del Sur/4s Ranch.

Any idea or suggestion ? Or wait for one year or more for Real Estate prices to get soften so become more affordable in Del Sur/4s Ranch/ Carmel Valley.

Also i own a two bedroom condo in Mira Mesa which has decent equity.

Regards,

utpal

Folks,

I have been in San diego from last 17 years and would love to own a small beach house (not a condo though) overlooking nice ocean. Time horizon to buy within 5 years( can start saving for down payment) budget around $1.5M.What places i can start if someone can recommend and what i can do to make a great decision?  Recently been to Sunset Cliffs and love the location but didn't check the real estate prices. But if anyone has any experience buying a beach house and give any suggestion would be great.

Regards,

namal