All Forum Posts by: Basit Siddiqi

To help reduce the chance of an audit, work with a professional who has clients claiming real estate professional status.

They will know how to complete the forms correctly.
Filling out the forms correctly reduces the chance of an audit.

Do you live in the multi-family home that you purchased?
If you do, this is considered house-hacking and it has unique tax implications to you.

Since you do free lancing in addition to owning a rental, you want a tax professional who understands small business taxation on top of real estate taxation.

Sounds like you have a good understanding of the strategy.

I normally work with clients by giving them a price range of a property they need to buy to get to their desired tax bracket.

Best of luck.

What is cuasing the multi-member LLC changing to a Single member LLC?

Did one partner buy the other partner out?
Did one partner die?

You normally want to mark that the partnership is filing a final year return.
If one partner is being brought out, that individual will have to report a sale on his/her individual return.

If you want someone local, you may want to reach out to @Michael Plaks

Regarding creating an LLC in Texas, be mindful that it may require the filing of a franchise tax return in Texas.
Luckily, Texas is a commuity property state which may exempt a husband/spouse from filing a separate partnership tax filing obligation.

New Jersey has complex tax laws compared to other states in the country. You want to make sure you work with an accountant who understands the state tax laws.

You mention doing a 1031 exchange which requires complex tax forms to be completed as a result. Furthermore, you want to make sure the basis of the new property is properly calculated

Best of luck in your search!

I personally think a 8% to 10% cash on cash return is hard to achieve right now.
It is easier if you are talking about overall return(Cash on cash plus appreciation).

I normally aim for 4% cash on cash and 4% appreciation annually.

Furthermore, using financing makes it harder to achieve higher cash on cash returns because in most markets, the interest rate is higher than the rate of return.

Best of luck

Tax accountants and tax attorney's will normally do two different tasks.

When I think about a tax attorney, they will normally defend you in a tax court, interpret a new tax law that passed to see how it applies to you and your business or deal with complex tax laws such as transfer pricing.

The tax accountant will normally help with tax strategies and compliance.

Best of luck.

Your best investment is in yourself.

Consider going to college or learning a trade.
Use the funds to invest in something that does not require much time so you can focus on learning.

If you do decide to get into real estate, you may want to consider doing a house-hack.
It will give you a place to live(potentially saving you a few hundred dollars from paying rent and also giving you training wheels for being a landlord).

The implications of taking money from a retirement account(if not Roth) is that the distribution will be considered income and potentially subject to a 10% penalty.

In my opinion, real estate investments and securities within a retirement account are used towards your later years.
So it doesn't matter whether it is in one bucket or the other.

If you are subject to the 10% penalty, I would only take out a distribution if you strongly beleive your return from real estate will be several percentage points higher than what you can invest in with your IRA.

For example, if your return within the IRA is about 8% and you can make 10% in real estate, I would consider doing the distribution because the extra return will pay off the penalty over a few years.

Best of luck