All Forum Posts by: Paul Allen

A word of caution: The FEIE is never as good as you think it will be. If you were there for 333 of 365 days (indicating you are qualifying under the physical presence test), then you will not get the maximum exclusion. You will get 333/365 (91.23%) of the maximum exclusion. Also, the excluded income is excluded at your lowest tax rates such that all remaining income is taxed at your highest marginal rate. And finally, while the excluded income escapes federal income tax, it is still subject to payroll taxes.

The FEIE is a fantastic tax break if you can get it, but I find many people have unrealistic expectations about it. Have a shawarma and enjoy the views!

@Andrew Pettit I know, my son is one.  He seems to go out of his way to appear dumb!

I once briefly shared quarters with a Marine SSGT who swore me to secrecy when I discovered him reading The Letters of Rudyard Kipling. I think he was ashamed to look smart.  :-)

You're making it really difficult for this old sailor to NOT make Marine Corps jokes.

YES. You can take the deduction even if the money is not invested.

 Correct. Only profit from rental activity is considered income. (Not gross rents received.)

On the flip side, rental losses do not count toward the MAGI calculation for the IRA deduction. If your W2 was for $75K and you had $6K of losses on rental properties, your MAGI would still be $75K for purposes of determining the eligibility of IRA contribution deductions.

Very true. OP stated he was in military, and all military are considered participants in an employer plan.

You get the deduction for the contribution to the account, not for the investments in the account.

The MAGI limit in 2019 for single filers (assuming you are single, but you didn't say) is $64,000. Below that you get the full IRA deduction, above that you start the phase-out. Above $74K MAGI you are fully phased out and get no deduction. Based on your post it seems your MAGI is $58,500 ($53,000 + $5,500) - so you would get the full deduction.

Call me if you have questions. Always happy to help service members.

Best of Luck with Your Real Estate Investing!

It seems you are willing to pay roughly $600 - $700 for the answers you seek. (a 'couple hours' X $300-$350/hour).

You may find that it will take you less time to work these things out on your own than to find a competent financial planner to do it for you at that price. You never know, though, you might get lucky.

Best of Luck with Your Real Estate Investing!

Your comment implies you don't think the advice you are looking for is fairly valued at $5,000. (That's an observation, not a judgment. Value is in the eye of the beholder, and successful RE investors are always looking for bargains.)

Based on what I have read so far in this thread, I think it would take me more than 25 hours to answer your questions. That would include getting you to articulate in detail what you want in a quantifiable manner, obtaining your current financial documentation, reviewing it, becoming familiar with the details of your current financial situation, analyzing alternatives to get you where you want to go, develop risk mitigation strategies, present the information to you, obtain feedback, make adjustments, produce action items for both of us, execute the action items, follow up, and (of course) document it all so the next time the Commonwealth regulators stop by I can prove to them I am not stealing from you.

What's a fair price for that work? 

The depreciable basis is the lesser of the value at the time the home was purchased or the value at the time it is placed in service as a rental property. If the house would sell for less now than when you bought it, you might need an appraisal. Otherwise, just use the sale price at the time you made the purchase (and back out the value of the land). 

If you made any capital improvements to the property since purchasing it your calculation gets a bit more complicated. Your tax professional can help you with this when it is time to file your tax return. You should get one familiar with real estate investing. 

Best of Luck with Your Investments!

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