All Forum Posts by: Tracey Hamilton

I'm late to the party, but also in North Idaho - up in Bonner County, north of CdA. We have been trying to get our feet wet with a buy and hold, but had a deal fall through just before covid hit, and now things have escalated, of course. Still looking, although I haven't found much that will cashflow, much less give good ROI.

Are there any REI meetings or groups in CdA?

Tracey

Looking for a cash investor who wants to make some money!

We need to exit out of our position as seller in a wrap-around mortgage contract.

Property was sold on private contract 2 years ago. Buyer made good down payment and has made every monthly payment on time.

Property is rural Southern Oregon, on acreage, in great condition.

Payments have another 28 years to go, amortized out at 7% interest, so there is a both principle and lots of interest left on the contract.

This would be ideal for someone looking to invest up front for a long-term, reliable return.  

Message for details.

We own a property with a fixed-rate loan against it (was a HELOC, moved to a SmartLoc), that we sold on a wrap-around deal to a buyer. Title, taxes, and insurance stays in our name, buyer paying monthly with interest.

We are looking to sell the note (if that's the right terminology) and liquidate our equity out of it. 

Is "sell the note" the right term to use?  Where do I look for investors who would be interested in this kind of deal? 

THANKS! 

My basic question is, are expenses incurred in the purchase of a first-rental property deductible as losses on taxes, if the property deal does not go through? Example, had accepted offer on a mulit-plex, in escrow, paid for inspection and appraisal, many miles to check out property, inspect property, be there for appraisal, etc. deal fell through after 3 months in escrow due to a lending issue. Any way to recoup these costs? I think it would be allowed if there were other rentals already owned, but not sure about it if it's a first rental purchase. Also, it was a 4-plex being purchased on an FHA owner-occupied loan, would that modify anything?

Potentially related question - are there on-the-face benefits to doing a lease-to-buy option with a potential home buyer for 5 years, then converting to installment sale VS just doing the installment sale from the start?  Or would it be a case-by-case basis where you'd want to run the numbers to see?  This would be on a personal residence, so option 1 would convert it to rental, then installment sale & capital gains.  I need to double check details, but I believe it's located in an Opportunity Zone, as well, so I'm thinking that might factor in. 

THank you!  Trying to wrap up planning for 2019 strategies and thinking through potential strategies for 2020. 

Just trying to make sure I'm understanding the whole thing from all angles.
The EIN had no 1099s in or out, nothing like that.  It had the checking account, and lots of debits on there, but that's all.  

Thank you Jaysen.  That's exactly how I saw it.  THank goodness it's all over and we're starting fresh in our new state.  THANKS!

When doing our first flip project, we purchased the home in our personal names. 

We used money from our LLC account for the purchase, but IIRC the actual cashier's check to title company was in our personal names.

We used the LLC to purchase the vast majority of the materials and supplies for the rehab.

We did also use a Home Depot credit card in our personal names for some of the materials and supplies.

When house sold, it was sold under our personal names, and the check from title company first deposited to our personal checking account, then transferred over to LLC account.

QUESTION: Because we failed to title the property in the LLC name, is there any way the IRS can choose to exclude the rehab costs from increasing the basis of the home?

LLC is a 2-member LLC.

THANKS! 

New line of thinking - if the single flip project DOES qualify us as "dealers" in the eyes of the IRS, and the sale is reportable through the LLC, which is a 2-person LLC, then can we elect S-corp treatment, one member take a salary on a portion of the net profit, and K-1 the rest of the profit (qualifying for the 199A deduction on that portion) and only paying FICA tax on the salary? Am I thinking that through correctly? THank you!!

@Natalie Kolodij

So, I need to be reporting the 1099-S as gross receipts to the LLC business (on 2019 Schedule C) and related costs as COGS and expenses, and I DON'T report it on Form 8949 and Schedule D (Capital Gains) as proceeds - basis = gain?

What is the determining factor in which way the sale and gain is reported?  THANK YOU!  

Hi All!  I am wrapping up tax prep on my extension for 2018.  I am thinking creative thoughts about how to handle the real estate flip project that we began in 2018 and completed in 2019.  Let me know how you all think it should be handled on the taxes (I will be preparing my own taxes, and getting a look-over from a current professional before I send them in next week).

Here's what we did for this business / flip project: 

2018 - Set up 2-member LLC (in Oregon, where we lived) in preparation for doing property flips. We anticipated doing about 5 flips through this company. Got an EIN, set up bank account, got business cards. Funded the business checking account with funds from the HELOC on our personal residence.

Aug 2018 - purchased a SFH in Oregon for cash, in husband's personal name only. (don't ask why, total brain fart to not make the offer in the LLC name). We went to work on it ourselves, nights and weekends. Purchased a lot of assets for the "business" as we figured this would be the first of at least a few. Many tools, utility trailers, etc. Added fun, I was a licensed real estate broker, and did my one and only 2018 transaction as the buyer's agent for this property - received a cute little commission. I will do a Schedule C for that part time real estate business, which will end up a small loss.

Late 2018 - had a semi-brain fart and switched title to add me, as wife, on title. Still didn't put it in the LLC. No, I don't know why I didn't.

March 2019 - sold the home.  Received 1099-S from title company (in husband's name only).  I acted as seller's agent for real estate brokerage, and again, it was my one and only real estate transaction for 2019.  Make about $40k "profit" - net gain.

July 2019 - moved out of state, to Idaho. 

Now -once I've finished the 2018 taxes, we're closing the Oregon LLC down entirely. We will start fresh with business stuff up here in Idaho.

So, in contrast to our plans, there was only one real estate flip under that LLC business, and in the state of Oregon.

Can I simply scrap my plan of having a "business" that did flips, and NOT prepare a return for the LLC for 2018 or 2019, and put all costs of the rehab, including tools, into the Basis of the home, and just report everything in 2019 on a Form 8949 and Schedule D for the IRS? Close down the LLC in Oregon with the secretary of state and shut down the checking account?

I love that idea, but it seems too easy. 

Did I mess up that option by running the supplies and expenses (and a couple of subcontractors) through the LLC checking account? Or is it all still considered basis? THe more I think about it, the more I think YES, I can do that.

THANKS for all your input!  I'm going to sleep on it, and then make my move tomorrow and finish up my taxes! 

Tracey in North Idaho