All Forum Posts by: Pesi S.

Oh Ok. Thank you for the information

Thank you Natalie for sharing this information. Can this "grouping election" be changed ?

Hello,

From what I have been given to understand from a CPA, he  mentions that Carried over Passive Losses from Real Estate Rental Activity cannot be utilized when you sell only one of your properties in your LLC. You have to sell ALL your properties in the LLC in order to use all the carried over passive losses. This differs from some of the videos I am seeing on YouTube. If anyone has been through a similar situation please advise.

Below is the hypothetical example he created

Person has income from a job (W2) 

He and his spouse have a LLC with holds their multiple real estate rental properties. Since they are not qualified as Real Estate professionals, this is treated as a passive investment.

You have to file separate return for your LLC and the combined rental activity profit/loss from all the properties combined will be carried over to your personal return each year

Let's say over a period of  say 10 years, Property A  had losses of 25K,  Property B of $35K and Property C of $10K. So total of $70K losses for all properties. These losses could not be utilized in any of the years since the MAGI from W2 was over $150K and hence these losses had to be carried forward/deferred each year.  There was no year with a combined rental activity income/profit too

Let's say you sold Property C last year and the gain is say $50K. You cannot utilize the carried over losses from Property C or from any of the remaining properties. All these losses will continue to get deferred till you sell the very last property in your LLC.

You sell Property B next but you still cannot utilize the loss

Finally when you sell the remaining property A, then only all the carried forward losses can be utilized. 

Question is if the final property A has gain of only $10K, then what happens to the remaining losses of $60K

Thanks Dan. Does one count the prepaid/escrow as costs too or exclude them ? Since I am adding the closing costs of 5k to the loan, I will need to also account for the additional interest I am paying on this 5K which adds to recovery time.

I was curious if there was a general guideline which recommends whether you should be below a certain recovery duration for refinance to be beneficial.

Hello,

If one can refinance and reduce their interest rate on a investment property by 2% points but it takes 2.5 years to just recover  all the fees  is that normal breakeven time and worth doing it. The closing costs come to around 5K on a $105K loan out of which $1K is prepaid & escrow and monthly savings on interest is around $180. No points on loan. With this one needs to hold onto the property for at least 3 plus years to have some benefit as we will be rolling over the closing costs into new loan and you pay interest now on a higher loan balance.

Thank you.

Ah Ok. Thanks. That is a great point.

Jon, thank you for sharing your experience. It is surely a painful and time consuming process and I guess you also need to weigh whether the amount you need to recover is worth the additional costs and time.

No David. Not at all. I fully trust my property manager to do the right thing for me and protect me as they have been doing. As a landlord, I just also have to do my verification and homework on the side always.

Hello

In June 2019,  we got a court order and evicted a bad tenant who did not pay rent for 3 months just for the sake of not paying and had no other issues. The tenant left after the court order and my property manager told me that she has submitted to the lawyer and the lawyer has submitted to the collections agency and credit bureau. She also told me that she has put the tenant's name on some website most of the property managers use in North Carolina so the tenant will be flagged if she applies for new rental.

It's been more than a year and I a not seeing any movement on this. When I ask the property manager I am told that lawyers are following up. It doesnt seem like the property manager or the lawyers are much interested in pursuing this. Amount is around $4K.

What are the avenues to take this up and persue it to get the payment from tenant. Also how does one ensure this tenant does not cheat other landlords eve again ? I asked my property manager how the tenant was able to get through her system of checks and balances and was told it happens on occasions

Thank you.

Hello,

If a landlord has a property manager managing his property can he still obtain the credit history and background checks verification the property manager has conducted to vet a tenant just to verify that the manager is really conducting a high level of due diligence ?? I am told by property management company they cannot share anything at all by law in NC and I need to take their word for it and rely on the checks and balances . Is this correct ?

Also, how does one find landlord associations one can be a member of in Charlotte, NC ?

Thank you