All Forum Posts by: Bryce Christensen

Is there a difference between an REA and an REIA?

If not, you might check out http://reiahouston.com/. They claim to be about networking and education, not just about selling education materials. I haven't been yet, but if you'd like to check it out with me, pm me.

@Denise Mayo-Walley The timing on this particular meetup isn't good for me (bummer), but it's the next one I've heard about.

http://www.biggerpockets.com/forums/521-events-and-happenings/topics/125422-houston-meetup---thursday-may-8-2014

@George P. You can put them to work, you just can't pay them wages. You (and your spouse, if you have one) can each give them (or anyone else, for that matter) gifts up to $14,000 in 2014 without having to file a gift tax return.

@Colleen F. Yes, they are disclaimers and it's a sad commentary that I have to include them to avoid danger to my license. You'd think it would be understood that when an accountant or attorney speaks in a forum such as this, that they are making general statements and not specific advice, but licenses have been revoked for such things. I'd love to live in a world where accountants didn't have privileged knowledge, but rather a way of thinking and analyzing that adds value, but even with the Internet, we're not there yet.

@Colleen F. hit it on the head as far as Federal is concerned. But @Dana Nicholson, watch out for New York employment law. I'm not intimately familiar with NY law; it just has a reputation of being much more tightly regulated than other states.

A quick search pulled up the following article, which seems to indicate your son may be too young to employ in an office until he is 14, but that is hardly the final word on the matter. I would recommend you talk to a CPA or attorney familiar with NY Employment Law

http://www.labor.state.ny.us/workerprotection/laborstandards/workprot/specoccs.shtm

I'm an accountant, but I'm not YOUR accountant. This post is for general informational purposes and is not a substitute for professional advice from a CPA or attorney familiar with your situation. By using this information, you agree to limit my liability to what you paid for it (that's $0, btw). Have a nice day.

@Denise Mayo-Walley Welcome. There are a number of people here from the Houston area. Several of us, like you and I, are relatively new to real estate investing, so I suppose we'll all get the opportunity to learn together.

@Dawn Ramsey We just got here a couple years ago, but we enjoy the area.

Welcome, neighbor. How long have you lived in the Katy area?

@Patrick Jacques I've heard* of using an S-Corp for holding property and using an LLC for managing it to shield the property equity from liability arising from someone slipping on ice, etc. I have heard of using the LLC to open a retirement plan and then maxing out the contributions in it, but I'm not sure if that is what you are referring to. Do you have any additional information (brochures, etc.) to help clarify?

*This structure was first recommended in my hearing by Mark Kohler, a CPA and attorney, at a Nouveau Riche (free/sales) presentation a number of years ago. This structure particularly makes sense for multifamily and commercial property, where there is a lot of daily traffic by many individuals.

I'm an accountant, but I'm not YOUR accountant. You should discuss any actions you are considering with a CPA familiar with your situation and the laws applicable to what you are trying to do. This information is provided for general information. By using this advice, you agree to limit my liability to what you paid for it (that's $0, btw). Have a nice day.

@Account Closed Your CPA was probably referring to the effects of unestablished income on your credit. Schedule E income is still taxed in the year earned, unless you lock it up in a corporate entity (C-Corp, S-Corp, or Corp-LLC*).

There are other effects of using a corporate structure- some deductions which are capped for individuals (like depreciation, which cannot exceed income less all other expenses) but are not capped for corporations, so there are also times when such a structure is appropriate to capture those tax effects. There are also benefits (like the avoidance of taxation of long term gains on the taxpayer's primary residence) that are denied corporate structures, so choosing the right one for a particular scenario can be important.

*Corp-LLC- LLC that has elected to be taxed as a corporation, which involves the corporation recognizing income in the year it occurs, but the investor personally recognizing income in the year the corporate entity distributes it. Yes, income gets taxed both times, although the second time is at a preferential rate.

See the disclaimer in the earlier post. Let's save the planet by reducing digital waste. ;)

@Account Closed Short answer is yes, you will be taxed for real estate income and appreciation. There are a number of practices that can help defer taxes or help get preferential rates, but real estate has been bought and sold for at least a few thousand years before anyone thought of the United States or the IRS, so it's fairly well understood and they generally will make sure that tax is paid on income earned in this space.

You'll want to figure taxes into your planning- the way you structure your business may help or hinder you through when the income/appreciation is recognized. It will also effect how much you are personally on the hook if something goes badly. The nice thing is that starting out, you generally don't have much to take and the taxes are relatively small. Having said that, it still might be a good idea to spend a few minutes and some money with a CPA and/or attorney setting things up and identifying the tax effects of your exit strategies to try to keep capital deployed before handing it over to the government.

Yes, I'm an accountant, but I'm not YOUR accountant. This advice is provided for general, informational purposes. By using it, you agree to limit my liability to what you paid for it (that would be $0, btw). Have a nice day.