Rental Property Investor · Modesto, CA · Member since 2020 · 8 posts · 2 votes
Hello. This is my first post on BP, and I have a couple questions for anyone who's a CPA, or has had a similar experience.
I just sold my primary residence, I used the profits to pay all my credit card and other debt off, what's left over for investment opportunity is 100k. Also, my wife and I are on the path to make around 100k this year from employment for our 2020 taxes.
1.) My wife and I currently don't have a 401k. Would it be beneficial for us to open and max it out for our contributions this year for tax exemption? or are there other tax exemption accounts that would benefit us more?
2.) We plan on using the remaining profits we have left from our sold home in to property investment with the intent of buy and hold, is there anything we should know that would help us with next years taxes?
First, it depends on your financial situation, your goals, your ages, your family situation, your obligations, your experiences and skills etc etc etc.
Second, it depends on your personal preferences, beliefs and biases. Two people in identical situation will choose two different paths.
Third, it will still be a roll of dice, because life is always unpredictable, and more so now than ever before.
All you can get from someone answering this question with a specific recommendation translates into: "this is what I did, for better or for worse." How does it help you, other than maybe expanding the array of options to choose from?
This is very much like asking what is the best occupation or the best relationship or the best place to live.
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
6y
(I'm not a CPA, but could play one on tv!)
I can tell you that with rentals, we are able to write off all of our rental income between expenses and depreciation (that's across 40+ houses). Not a bad thing to owe zero taxes. :) I would definitely recommend to set up a corporate structure - it allows you to write off all sorts of things... cars, car insurance, health insurance, life insurance, phones, internet, trips (oops... I mean "Annual Meeting Expense"), meals, etc.
My vote would be to buy 3-4 rental properties through financing. Bought right, you can make 15-20% return on investment per year, (plus all the write offs above)
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
6y
I would definitely fund your 401k to the point your employer matches that contribution. You should never turn away 100% profit on an investment. After that, though, I would diversify it into real estate. I've only been at it for 3 years, but our return on real estate is head and shoulders above the long term market average of 7%, and even more so of the past 2 years.
Interesting question- most CPAs are very conservative. However, Some do invest in Realestate. invest the $100k in your highest ROI and safest asset class.
First, it depends on your financial situation, your goals, your ages, your family situation, your obligations, your experiences and skills etc etc etc.
Second, it depends on your personal preferences, beliefs and biases. Two people in identical situation will choose two different paths.
Third, it will still be a roll of dice, because life is always unpredictable, and more so now than ever before.
All you can get from someone answering this question with a specific recommendation translates into: "this is what I did, for better or for worse." How does it help you, other than maybe expanding the array of options to choose from?
This is very much like asking what is the best occupation or the best relationship or the best place to live.
Rental Property Investor · Modesto, CA · Member since 2020 · 8 posts · 2 votes
6y
Thank you for your input @Eamonn McElroy and @Michael Plaks. This really helps me understand how my question come off to an professional. I am uneducated in these matter and was hoping that would be pointed in the right general direction.