Looking for an accountant in Vancouver WA or Portland OR

4 Replies

Hey BP!

I am looking around for an accountant in the Portland/Vancouver area who has RE clients and can speak into how Private Money lending will be taxed.  Mine seems to have taken a vacation :(  Your help is appreciated. 

@Patricia K.

The income from private lending will be considered interest income and unfortunately does not qualify for any deductions associated with owning an investment property. I love being a private lender but the fact that it simply increases my taxable income makes me consider shifting some of my note portfolio to multi-family perhaps...

You might find this discussion beneficial where similar question is raised: 

https://www.biggerpockets.com/forums/51/topics/604...

Owning notes in your retirement account (especially self-directed Roth IRA or Roth Solo 401k) is ideal since you can have tax-free income for the rest of your life if you utilize one of these vehicles. 

I don't know of any CPA who is local to you to recommend, the closest would be @Natalie Kolodij who is based in the Seattle area. You may also consider @Michael Plaks or @Nicholas Aiola . All of them are very knowledgeable when it comes to REI and work with clients remotely. And when it comes to selecting a CPA, their experience, knowledge and customer service is far more important than proximity.

Thanks for the mention, @Dmitriy Fomichenko

@Patricia K.   I thought that Portland did not have any accountants or taxpayers. Everything is community property and free in Portland. :)

Private lending is taxed one of the two ways, crudely described below, in non-technical terms.

1. Investment. The income is taxed as interest, which means ordinary rates but no self-employment (Social Security/Medicare) tax. Business expenses are not deductible (after the tax reform), and the new 20% deduction on net income does not apply.

2. Business. All expenses are deductible, and the new 20% deduction applies. However, the resulting income is taxed as business income, which means ordinary rates PLUS 15% SE tax.

The starting point would be to decide which of the two treatments is applicable in your situation and then structure it accordingly.