All Forum Posts by: Sam Cummings

Hello Helpful Friends, 

Background: Opened an LLC in mid 2015, currently doing taxes. We have no income for 2015 seeing as we have only invested thus far.

 What exactly will my business partner be able to categorize as a loss for 2015? Roughly $114,000 was spent on the capital investment of the properties. The remaining $35,000 was spent on improvements to those capital assets. Will all of that be seen as capital expenditure even though one of the assets was held for less than a year?

If he won't be able to report loss, how will that $149,000 be recognized?

We bought our fist house for $43,000, we spent about $40,000 on the renovation and will be selling it for $115,000. How much of the $72,000 price difference ($115,000-$43,000) can be taxed. What are the requirements for our renovations to be factored into our Capital Base? I have read that they must contribute to the long term life span of the asset, but this is short term. Any insight here?
Seeing as the sale of our first property will be taking place in 2016, what should I be doing in preparation so that come next tax season everything is organized.

We own two properties under our LLC, If they are both sold this year, we have to separate all costs to the respective property, correct? Any advice on this?

Thank YOU!!!!!!!

Hello Fellow Well Endowed Pocket Havers,

Background: Recently purchased a single family home in Philadelphia as an investment hold property in cash. Decided after buying the house it would be worth selling due to comps in the area. I'm now in contract to sell the property. I had the intention of using a 1031 exchange after selling this house.

Numbers: 

Purchase Price - $40,500

Renovation Cost - $40,000

Sale Amount - $116,500

Time Frame - Under 6 months

After days of research and countless contradicting conclusions, it has come to my attention that because this is a short term sale, the property may be viewed as Inventory as opposed to an Investment, which would then render it ineligible for a 1031. The IRS profiles some Real Estate Developers such as myself to be "Dealers" (ones who "flip houses," which in no way, shape or form am I admitting to be).

OTHER KEY INFORMATION: This was my first property ever purchased, I have since bought a second with the intention to sell it.

Please god, if any of you, have any insight on this matter specifically for Philadelphia or Pennsylvania. Bestow your knowledge upon me. Or if you think you can be of help in anyway, that is also truly appreciated.

Best Regards,

Non Dealer