All Forum Posts by: Basit Siddiqi

You will report worldwide income on your federal and Kansas tax returns.
You will also include the MO activity on your KS return.

Your MO return will only include the acitivity within that state, which in this case, is the rental property.

In the future, if you have income in MO(either through the sale of the property or through rental income), you will pay tax to MO but KS will give you a credit for any taxes you pay to MO.

best of luck

Are you doing construction to immediately sell or will you be holding these on to be rentals?

That will have an impact on how it will be treated for tax purposes.

If you are doing new construction and then immediately selling it, you are considered a 'dealer' and the real estate is not considered an investment property.

The IRS treats those who hold things long-term / treat them as investments in a favorable light.

Best of luck

First - You should be investing to make money and a return. Tax deductions / write-offs should be a second concern.

There are some rules that you need to follow to treat a short-term rental as 'active'(non passive) income which would allow you to offset it against other forms of income such as rental income / wages.

I saw you previously had a post on 750 hours and real estate professional status.

The two requirements for real estate professional status are
1) Spend 750 hours on real estate related activities
2) Spend more time on real estate than your W-2 job or business.

You want to have a conversation with your accountant to see what hours count and what hours don't count.
Furthermore, your accountant may have a nice template for you to use to make your recordkeeping easier.

Fix and Flips require Money(and or atleast reputation).

If you are in a bad financial situation, fix and flips may not be possible for you(especially if you have no experience). Some lenders will fund 100% of the deal + renovations if you are experienced.

Wholesaling is possible but be mindful that it is a business, you don't make any money until you can persuade someone to sell their house and then to find a buyer.
I personally think its easier to be an agent, still a business but there should be people teaching you and you have more of a reputation when talking to sellers.

You may want to first explore cities that you are already familiar with.
Think of cities where you grew up, went to school, like to vacation to or see family.

You will have a better idea of what the good / bad parts of town than a brand new city that you are unfamiliar with.

Best of luck.

$40,000 x 25%(assuming a 25% interest rate on credit cards) = $10,000

This is more than the annual cash-flow that you are getting from the rental.

I would look at a way to paying off the credit card debt asap.
Look to see if you can take a HELOC on the investment property(likely difficult).
If you can't you may want to consider selling the proprety.

You will also feel a lot of relief of not having credit card debt hanging over you.

What is the interest rate on the car loan?

Why form a corporation, what is the benefit of this step?

If you have $100,000 of equity, you may be able to get a quad somewhere in the country assuming you put down $100,000.

If you lived in the house for 2 out of the last 5 years, you may be able to exclude up to $500,000 of the gain from sale.

You will realize the loss for tax purposes when you sell the security, which it sounds like will happen in 2025.

You may want to see if each partner has enough passive loss carryforward to offset the gain.