All Forum Posts by: Basit Siddiqi

How much money do you plan to generate from this rental and do you plan to get more in the future?

How does the cost of the blocker corporation weigh to their tax obligations?

If the foreign tax obligations is $500 and the cost to file the C-Corp is $1000.
It may potentially not be worth it.

How does the cayman islands tax rental income from the US?

If you have a short-term rental, you want to have a conversation with your CPA to see if the property should be treated as active or passive.

If it is considered active, and there is a paper-loss created, you can offset the loss against your other income such as wages, interest and dividends.

A cost segregation study looks at a property you own to breakdown the various assets you purchased.
The goal is to increase the depreciation expense by finding assets that have an asset life less than 27.5(residential) or 39 years(non-residential).

Whether you should get a cost segregation study done is whether you will benefit from the study.
Will you be able to use the added depreciation now or in the near future?
If its just gonna be added as a passive loss and not eligible to be used now or in the near future, I would not get it done.

best of luck

Dividends, Capital gains in general are considered 'portfolio income' and not necessarily considered active/passive.

Therefore, passive losses from rentals won't help to offset your portfolio income(Interest, dividends, capital gains).

There is an exception if the capital gains comes from a passive activity.
I.E. the sale of a rental property

If the property is a personal property used for personal purposes, there is no depreciation since its not a business asset.

There may be a chance that you have a home office within the home that is eligible for some write-off but you have to be using the home office towards a business activity.

Is it possible? Yes
Is it recommended? Maybe, maybe not

You have to weight the pros / cons along with the risks.

Your BP mentions you are 'new to real estate'.
You are getting into a new asset class along with a business(I consider a STR more of a business than an investment).
How much will you save in taxes?
How much will you spend on this venture?
How much of a return will your property generate?
Do you have a full-time job already, assuming you have extra time, do you want to spend it doing another brain-draining task or would you rather spend it enjoying yourself?

Best of luck

Be mindful that a house-hack is a partially a personal proprety and partially a business property.

An LLC is normally meant to only hold business assets. You may not be getting the protection you are looking for if you mix personal and business assets within an LLC.

Best of luck

If you are a trustee, it is important to know what type of trust you are a trustee of and understand if there are any filing obligations.

There are some trusts that are considered a disregarded entity and do not have a separate filing obligation.

I would never purchase equipment or furnishments for a house that you did not close on yet. Especially with a credit card as you might be paying for un-needed interest.

It sounds like you found a property from a wholesaler but are looking to get comps on the property.

How will the agent who will run comps get compensated?
Are you providing them a one time payment?
Are you going to use them as an agent and pay them 3%?
Are you giving them the promise to use them in future deals where they will earn 3%?