All Forum Posts by: Wen Chen
Wen Chen has started 2 posts and replied 3 times.
Post: Section 121 with LLC
- Andover, MA
- Posts 3
- Votes 2
I purchased a SFH in 2018 and lived in it until 2023. In 2023, I converted the property into a rental. Now, I'm considering whether it makes sense to create a LLC and "sell" the SFH to the LLC to take advantage of Section 121's capital gains exclusion, as we still meet the 2 out of 5-year rule, and to potentially increase depreciation value.
Has anyone gone through a similar situation or have advice on the best approach? Would transferring the property to an LLC impact my eligibility for Section 121? Any insights or guidance would be greatly appreciated!
Post: Questions about tax write off's for rental property
- Andover, MA
- Posts 3
- Votes 2
Originally posted by @Michael Plaks:
None of that is an expense.
Costs specifically connected to obtaining the mortgage (appraisal, credit report, origination fee etc.) are combined into "loan costs" and then set up for amortization over the length of the mortgage.
The rest is added to the purchase price and results in "tax basis" which is then set up for depreciation over 27.5 years, after allocating a portion of the basis to land.
If this process sounds complicated (which it is) - you may need an accountant to help.
Thank you so much for your help. I think I have an idea how to separate these fees:
Loan cost - Amortized over life of loan
- Application fee
- Appraisal fee
- Loan Origination Fee (delivery fee)
- Credit Report Fee
- Record Mortgage fee
- Mortgage tax
- HOA questionnaire
- title insurance (mortgage)
- bank attorney fee
Tax basis
Abstract and recording fees
- record deed
Legal fees, title search, document preparation
- legal fee
- title exam
land survey
- flood certification fee
- Inspection fee
title insurance
- title insurance (owner)
Post: Questions about tax write off's for rental property
- Andover, MA
- Posts 3
- Votes 2
I just bought my 1st rental property last year and need some help with what costs to file for tax return.
Turbo Tax asking to escrow fees for following categories:
Abstract and recording fees
Legal fees, title search, document preparation
land survey
title insurance
transfer or stamp taxes
expenses you paid for the seller
These are the expenses on the closing summary:
Record deed
record mortgage
mortgage tax
bank attorney fee
HOA questionnaire
flood certification fee
title exam
title insurance (mortgage)
title insurance (owner)
delivery charge
legal fees
application fee
appraisal fee
credit report fee
which categories will the fees on the closing summary fall into? And will I enter other fees under expenses (loan application fee, credit report fee)?
Thanks in advance for all the help!