All Forum Posts by: Robere Istatia

@Brady Ascheman - No, if you are not offering the guests services that add to their convenience then there is no SE tax. If you are adding convenience services then there will be SE tax. If you are a REP and just collecting rental income there is no SE tax regardless if it is passive or not. @Natalie Kolodij was providing you with examples of services provided that would be adding to the convenience of the guest this they would be subject to SE taxes.

The key question is are you just collecting rents (no SE tax) or are you adding services (there will be SE tax)

Hope this helps clarify

I agree with @Isadore Nelson, there will be an initial sting due to to the IRA transaction but with quick math at 8% your 60k will generate about 4.8k in year one, in 4 months at 1.3k you've already eclipsed that, their will also be a larger tax for passive income and an initial penalty from the IRS, but it won't erode the 8 month difference let alone the yearly compounding effect. With time hopefully the numbers will be even more in your favor with appreciation of the property and you will have cash flow to continue to invest, also it is building equity in your portfolio that you may want to tap for opportunities in the future. Roth IRA's are one investment tool but they are not that aggressive, real estate is a lot more aggressive but it also comes with more risk than a Roth. I would also recommend talking it over with a RE professional in your area to make sure the comps for profit are accurate because it could swing a lot with different profit projections. Great job with the portfolio you've already built.

Passive losses can only be deducted from passive income. 

If your wife has REPS you can deduct those losses from W2 or active income. 

You have to treat the losses as if they were in two separate buckets, passive losses for passive income. Active losses (while REPS) for active income. This is also key when losses are being carried forward, they also need to be in these buckets.

For your second question. The properties are considered on a separate basis, you can actively participate in one and passively participate in others. This still goes back to what I stated previously about the two buckets for passive and active income. Depending on a property by property basis you can determine if your wife has REPS or not, this determination will place the income in one or the other bucket. 

Also @Sean Graham has a valid strategy above as well. Depending on the number of properties in your portfolio and how many your wife is considered REPS for.

Hopes this help.

Texas won't charge you a franchise tax unless you pass their yearly threshold but 7k in this example wouldn't pass the threshold. For LA they want you to report all of your income to be applied towards state income tax calculations and back out the amount you've paid in taxes due to other states. 

Hello Sophie, 

It can be very advantageous to get the cost segregation done now while the property is new in your portfolio. If you wait you will need to amend returns retroactively. 

The main advantage to doing a cost segregation is to speed up depreciation to lower your taxable income on the in recent years rather than in the future. There will be other opportunities to lower your income in the future so I would focus on if you need your taxable income reduced and if so by how much for the next 3-7 years, then you can determine if a cost segregation approach is best or an alternate. I am a CPA and there are several others on here that can help with the details.

Best of Luck, 

More than likely the bank would need some sort of collateral or good credit. If both are not good you are going to have a tough time getting a loan of that amount. 

If there is no match there is honestly no reason to tie your money up with them especially if the returns are lack luster. I would either setup your own third party 401k if you’re in a situation where you need one. If not I would do exactly what you were suggesting and just normally invest. Most 401k returns are moderate at best the only reason to take advantage of them is for the match, once that’s out the picture the decision is a no brainer. 

With these matters I recommend a CPA to help walk you through the nuances of a transaction like this. There are a few ways to do this but it depends on your situation, we would need to know more. If you are single or married and lived in the house for 2 years you are allowed to deduct 250k-500k in gains as a primary residence exclusion. 

If the primary residence exclusion isn’t sufficient depending on the situation why you are selling. If you need to move which is forcing the sale there are exclusions available for that as well. 

Lastly but the most notable is a 1031 exchange can happen. If you are keeping your money in real estate but not that specific property once you sell the property, if you turn around and buy more real estate the gains can be all the way or partially excluded depending on the new property you buy. 

I am a licensed CPA if you’d like to talk more about this feel free to message me. 

Hey @Erin Elam, 

I know there is hardly any information on B4A on here and that was the main reason I started this post. I just wanted to have a source of reference whenever I use B4A again in the future.  

As far as the process went...... It was surprisingly smooth. I think I played it kinda safe though. I limited the shinanighans by doing my research ahead of auction closure (For instance if the auction ended in the next 2 days I didnt look into it due to the amount of time restricting me.) I found 4 almost identical properties that expired within 5 days (all from the same seller) and just waited until there was about 20 mins left on the auction. Of the properties I liked 3 of them started to get bid up but one was left behind. Like I said all of the properties were about the same in all respects ie. size county price. With about 20 mins left in the auction I jumped in and I won :). No other bidders. Once the auction closed I researched the seller and found them on Google. I gave them a call before they had a chance to call me and I got the ball rolling. I needed to wire the funds over and get a document notarized and sent to them and within 3 weeks I had a title in my mailbox. It was really easy and streamlined, I know it is a little scary jumping into something that is not widely reviewed but I definitely recommend B4A. If you have any further questions about the process don't hesitate to reach out. 

****** Update

I have since bought a property using this site. It seems to me that it is highly dependent on the seller you are purchasing from. I do agree with @Joe Mclain they seem to be making there money through fees but that does not negate the fact that you can still get a good deal. I have used this platform to purchase cheap land across the nation to allow myself to get experience selling at a distance. $601 for an acre is not too bad to teach yourself a lesson and to allow yourself to expand your scope of knowledge, plus you can sell the property. Do your research, sometimes you can find parcels with warranty deeds.