All Forum Posts by: Tushar P.

Except that a good lawyer should be able to prove that it was a planned criminal act, where the real estate professional (relative of op) who brought the deal to the op did not want to do it on their own (for obvious reasons) and hence devised the scam with the op, with the plan to invoke “non real estate person” or “first time buyer” profile if the scam didn’t go through. The lawyer should be able to drag the family member (real estate professional) into the lawsuit and the judge should be able to see what was being done.

@Daniel Dietz capital gains tax rate depends on the ordinary income, not the other way round. Your example is suggesting double taxation.

Some of his comments reveal his intentions: for example, saying “I don’t have much money” to suggest he is not immorally taking advantage of her. Also saying “this is my first purchase” to suggest he is not aware of such immoral strategies.

If this old woman was a client of a family member who is very much involved in real estate, why didn’t the family member take advantage of the woman? Is it because the family member didn’t think it was right, or did the family member think it would be better to do this via someone who is “making a first time purchase” and “doesn’t have much money”?

Majority of people may sympathize with his immoral behavior because this is biggerpockets, where many may be thinking why they couldn’t get such a deal 😏

Maybe he is able to take advantage of this old woman because she doesn’t have any relatives...

Property manager would charge 8-10% of the revenue, which could be same as 50% of the profits. Why share 50% of the profits with someone with no skin in the game? That’s why I don’t want to own the mess of so-called passive rentals. Syndication is so much better, with experts doing all the work (bird dogging, taking loans, managing the asset, etc) and taking only 20-30% of the profits.

@Timothy Solomon some pointers on paying zero taxes are discussed here:

https://www.biggerpockets.com/...

It will probably take some extraordinary recklessness to not have 2020 and 2021 as the best years, whether it is stock return, real estate related, or anything else. Even the minimum wage unemployed people from the retail and hospitality sector are making more via the stimulus than what they would have earned from their work. This is what the govt wanted, and they achieved it by printing money and lowering rates.

@Basit Siddiqi each LP’s contribution can be very little (much less than 0.1%) compared to the total capital stack, so it can be claimed that a very small portion of their contribution is going towards any expense. It is also possible that none of the hundreds of LPs are benefitting from the cost segregation, but they now have to deal with the paperwork that costs time and money. But that benefits many third parties besides the GP, so it is understandable that it is marketed as a good thing. Some LPs could even be asking the GP whether cost segregation will be done or not, without realizing that they may not benefit at all though will have to deal with the liability of paperwork.

@Sam Dal I don’t understand your assumptions and calculations. You may need to explain it better to get any answers. And I can understand the state not bothering about the taxes if the profits are very low at exit (even with lower adjusted basis caused by depreciation). If that is the case then I would be concerned about my investing abilities rather than taxes owed.

If the losses are not much then why even bother filing the state return? How much are the losses?

One thing I realize is that cost segregation is not a good thing for LPs. It will only benefit the GP (who uses the partnership money to order the cost segregation study) and all the middlemen involved, while it will significantly increase the losses for the LP requiring them to file the state return or risk not being able to capture the losses in future. For a typical LP, these losses are suspended i.e. no benefit at all of the cost segregation study. I guess when the GP and the middlemen involved in cost segregation studies proudly state its benefits, they are talking about the benefit to themselves rather than the LP.

If your losses are not much then no need to file the state return as the money spent in filing the state return is way more than the money saved by capturing the losses.

Did your cpa mention how the passive carry over losses are accepted by the state when they were not already recorded by filing a state return in the prior years? Does the state use the losses recorded in the federal return? Or all the K1s from previous years? Or simply some other form of contemporaneous record?

I’m also wondering what is the aim of such investments. Spending an hour to scan other people’s experiences would have revealed that a rental is not a passive investment (even when sourced from turnkey operators who continue as PM). More so in a location that relies on cash flow and will hardly have any inflation-adjusted appreciation. I have always wondered if such investments are made by someone who is retired, has lots of time and money, and is looking for a hobby to keep occupied? But of course I started wondering that only after I scanned the posts for other people’s experiences and realized what investing in rentals can lead to.