All Forum Posts by: Sean H.

Interesting. I'm setup as a sole proprietor, and never saw the advantageous for an S-corp.  How do i setup myself as a w2 employee for myself?

Its not incorrect, if i'm doing most of the work. If buy a house for 100k, put 100k into it and sell it for 300k. I might allocate 50k of that 100k in to my business income, because im actually doing 50k in work. Once the 50k is in the "business" section, i can make mileage write offs, section 179, and get my nice 20% deductible. 

I also contribute the maximal amount to my sep 401k to help ease the accumulation of my profits for the year. Since you can contribute as an employer and employee, i think that was around 50k for me last year. 

Beyond that, i'm paying taxes on the rest.

I haven't messed around with rentals, because unless the government won't red flag me for writing off a consistent loss on my income with bonus depreciation it isn't worth my time. I make more money on my invested cash flipping houses. 

Also, most people i guess assumed i was w2. All my income comes from the sale of flips and builds. I pay myself a reasonable amount of schedule c income out of the profits, since i do most of the work myself.

yes, shifting passive to active is a good point!

But, it sounds like everyone misread my post. I'm sure there's other cool purchases that have high enough write offs to justify the purchase

I always thought bonus depreciation was a double edge sword. Yes, you get high depreciation write offs, but the lowers the time period you can write off the rental, so its only worth holding for five years. But what happens when you sell, you have to pay on all that depreciation recapture? Unless...you decide to do a full gut remodel right before you sell, which would effectively wipe the slate clean of a lot of depreciation recapture. 

Besides the obvious write offs: gas, home office, etc. What are some of the worthwhile things you have bought that have a huge write off? At over 200k/year, with the progressive system your top end income is nearing 50% (unless you live in a tax free state). What are some unrelated or not so obvious things you have purchased or setup that were worth the write off? 

-I haven't really looked at the rebates on solar or other green purchases to see whether the deduction is very high on these anymore.
-I guess this one is real estate related, but if your set up your own property management company, and you manage your own properties you  have a whole new set of concurrent write offs. 
-section 179. New vehicle (truck). I assume most of you don't do your own construction, but for me this means the justification of a nice trailer or piece of heavy machinery (which i will actually use a lot for my business). 

I bought a lot from the city auction in durham (same process). To 10 day upset period really drags things out, it ended up taking me four months to win the auction. If you just do huge upset bids, it will expedite it though. Most of the properties end up selling what they do for on mls. I ended up paying mls price on mine, but it was in an area where i don't see a lot of vacant lots, so i was prepared to pay that price.

In theory all the liens will be removed upon the acquisition of the property. They don't detect irs liens though, but 99% of the liens are detected through their closing attorney. The closing attorney is the same you would use when you acquire a lot, but the cost is inclusive. I don't think they give you title insurance though. 

You tell me a good one then. 

On top of that, most wholesalers don't disclose anything (since they aren't lawfully required to), and require hefty earnest money deposits. In my nascent stages of investing, the few land deals that were somewhat decent upon my own investigation i realized had undisclosed sewer easements or liens. A newbie couldn't easily lose a lot of money playing the game. 

Im on the list of quite a few wholesalers, and ive never seen a deal worth buying. They overcharge when they actually get something in a reasonable area. I find much better deals on MLS.