All Forum Posts by: Sam Rogers

Talked with my CPA and he believes that because the asset was never actually sold and it is still considered to be a business asset, we should be fine to file under the partnership return. Was just curious to see what others did in this scenario.

At the time that we refinanced (Feb/March 2021) investment property terms were much more favorable on "conventional paper". Fannie/Freddy released new guidelines in March though that seek to limit the number of investment properties that are financed through them. Commercial paper is now much more appealing and we're now taking that route on our refis.

My business partner and I purchased a property almost a year ago with cash under the name of our LLC. We recently did a cash-out refi using a conventional mortgage. This required us to quit claim it into one of our own personal names. Income and expenses associated with the property still flow through our LLC account and we consider the property to be jointly owned. As far as we're both concerned, it remains part of the LLC.

What will be the implications when we go to file our tax returns? Would it be kosher to pass everything through the LLC even though it is not technically owned by the LLC? I like to think that the IRS only really cares about your "honest to god" intentions in something like this (and that should be evident here). But maybe I'm being naive.

@Christopher Smith - I'm expecting a capital gains tax bill of ~$100k. You're right that they are expensive, but when you consider the net present value of those dollars, it is well worth the cost (1.5% on the front end then 1.5% annually).

My greater concern is from the regulatory side of things. It seems like the only people that actually know much about these are the people selling them. Every other tax attorney/ accountant I've talked to has shared the sentiment that it sounds pretty borderline, though none of them have ever actually used the strategy. Trying to get a genuine perspective from someone that has strongly considered using one or actually used one.

Deferred Sales Trusts seem like a viable strategy to defer capital gains. But really the only info out there on them is marketing material (I'm talking to you Brett!). I've talked to a few tax accountants and attorneys about it and some are open-minded, while others are convinced that they are a complete sham (though they actually know very little about them).

I'm curious if anyone on here has actually seriously considered using one or actually used one? 

Holy crap @Michael Plaks!

Thank you very much for taking the time to write this out - I'm sure that this will be useful to someone else as well. 

I have a friend that recently received an insurance settlement that far exceeds the cost to repair the damage from a small fire at one of their rental properties. They made the repairs and now are left with a hefty windfall.

I know that this is not the end all be all place for tax advice, however, has anyone encountered this before? I am concerned that they will have to pay taxes on the "gains" from the insurance settlement. 

Rosanna, sounds tough, sorry to hear.

I actually recently had a small fire at one of my properties and I really feel like having a public adjuster is definitely going to more than pay for themself.

That being said, your claim could end up being a good bit more cut and dry given that they're all total losses, so might not be worth the expense of paying a public adjuster. 

Regardless, make sure that you're getting what the insurance company has promised you! You're entitled to every penny you see on your policy. 

also @Susan H., i am not living on the property. 

For those that asked: I inherited these tenants with no leases or rental agreements in place. I am definitely not planning to ask them to sign leases. Planning to nicely ask them to leave - just trying to do this as peacefully as possible. 

For those of you that are upset with my assumption or suspicion of guilt, you're welcome to have them move in to one of your places.

@Eric G. guess that's the one good thing here, right? Unfortunately, Tammy doesn't seem to be good at behaving either (at least according to her court records - seems to fancy shoplifting and drinking and driving fairly regularly). However, doesn't look like any violent offenses - so I'll be able to get rid of her without her trying to kill me.