All Forum Posts by: Basit Siddiqi

@Account Closed

It is certainly do-able to invest in rental properties/notes as a foreign investor.

You may be subject to ECI, FDAP or FIRPTA as a foreign investor
ECI = effectively connected income
FDAP = Fixed, Determinable Annual or Periodic Income
FIRPTA = Foreign Investment in Real Property Tax Act

As a foreign investor; you may be required to apply for an ITIN and file a 1040NR.
If you invest through a partnership vehicle; the partnership may be required to withhold on you during the year in which case you would have to file a tax return before you get a refund if you overpaid(or owe more if underpaid). 

Let me know if you have any additional questions.

@Christian Chevier

Based on your profile - It appears that you are "house hacking" where you rent out a portion of your house to a tenant and live in the remaining area.
The way this is reported on your tax return is that you are able to expense or capitalize items that are directly related to the areas where you have a tenant. You can then take a pro-rated amount of depreciation, property taxes, mortgage interest and repairs as a rental expense based on either rented rooms / total rooms or square foot provided to tenant over total square footage.

If you haven't done this in the past - you may want to have a CPA look at your past returns to see if you can amend it.

Also - congrats on purchasing the property in Akron!
as a result of your property in Ohio - You will be required to file a nonresident state tax return with Ohio and report your rental income/losses.
You may get a credit for taxes paid to Ohio on your colorado resident state tax return.

Please let me know if you have any questions.

There are many CPA's that work with clients remotely. Feel free to interview with a couple and see who works out best for you.

@Sean Yang

You will be filing a non-resident tax return in the states that you do not live in and have out-of-state rentals. Every state tax return is different but ultimately you will only be taxed on your rental income.
You may or may not pay tax on the rental business depending on if you are in an income or loss position.

You will file a California resident tax return because you are a resident in the state.
You will report your "world-wide" income on your california return which includes all the income you earned such as from your W-2, 1099 and even includes the income from your out-of-state rentals.

To avoid double taxation - California will provide you a credit for taxes that you pay to other states.

@Account Closed

Logan is correct - you will need to file a Nonresident State tax return with Wisconsin. You will report your worldwide income on your california state tax return.

You will get a credit for any taxes paid to Wisconsin on your California tax return.

@Steven Hoyler

Welcome to BP!

I agree NYC can be a difficult market to invest in because of the capital required.

You may need to look upstate NY, PA, NJ, CT, MA if you are looking to invest nearby with a lower entry point.

Are you attending any of the real estate networking events in NYC?

@Kole Kingslien

Congrats on have a helluva 2017! getting married and buying a rental property!

I saw another post from an investor requesting a CPA in southern WI but it doesn't appear to have any responses. Maybe you can reach out to him to see who he decided to use.

https://www.biggerpockets.com/forums/12/topics/411...

I think you would have more options if you opened up your search to Madison or Milwaukee.

Did you have any tax questions - I would be more than glad to help give you my input.

@Reggie Jackson

Congrats on closing on the duplex recently!
It sounds like you are househacking!

First and foremost - It will depend on if the duplex is ready for tenants. If it is not - you may have to capitalize the costs and not expense/depreciate it until it is ready for living/renting.

Then since you are househacking and living in 1 unit and renting out the other - you would be entitled to a full deduction for repairs and costs associated with the unit that the renter is living in.
Other costs that are associated with the house such as real estate taxes, mortgage interest, repairs to common areas that are not assignable to either unit - you are entitled to a deduction based on some ratio.
Renters rooms / total rooms or renters square footage / living square footage.

If you put the washer, dryer and stove in the rental unit - you can argue that it is deductible.
if you put the washer, dryer and stove in your unit - it is likely not deductible.

The next part is whether or not the repair/improvement is currently deductible or capitalized and depreciated over MACRS. 
Repairs are currently expensed
Improvements/Replacing are capitalized. However, improvements/replacing items with a cost below $2,500 can be currently expensed.

Let me know if you have any other tax questions.

@Hoang Nguen

There are many options of finding a local CPA with experience in real estate tax strategies.

1. Use the search function if a BP member previously was in search of a CPA. I like this approach because you can ask the posters who they ended up using and if they like working with them.
I went ahead and pulled up 4 posts of San Jose BP members asking for a CPA

https://www.biggerpockets.com/forums/618/topics/22...
https://www.biggerpockets.com/forums/51/topics/132...
https://www.biggerpockets.com/forums/51/topics/292...
https://www.biggerpockets.com/forums/548/topics/19...

2. Attend local real estate investment networking events. You can use the Events section of BP or go on meetup.com for groups/events. 

3. Find the big players in San Jose on BP.
Add the keywords "San Jose" and "California" to the BP keyword alerts. You will notice that there are frequent posters who respond to topics with these keywords. Feel free to add these individuals to your network and ask who they use as a CPA.

4. If you are still unable to find a local CPA - Feel free to broaden your search by looking for a CPA that works with clients remotely. There are many CPA's on BP that do so.

In the meantime - feel free to ask any tax related questions. I would be glad to give my input.

Good luck on your search!

@Sean Yang

Please note that as a California resident who invests in out of state rentals - you will be required to file a state return in California and the states that you invest in(unless the state does not have an income tax).
You will pay a tax to the states that you have a rental property in and get a credit for the taxes you paid on your California tax return.

The good thing about having out of state rentals is that you can plan your travels to the states that you have a property in and make a large portion of the travel deductible. You would need to speak with a tax adviser on how to do so and what portion of the travel would be deductible.

Another thing to worry about for California and having out of state LLC's is that California says that out of state LLC's with general partners/managing members making decisions in the state of California are doing business in California.
This may or may not subject you to the filing of form CA 568 and paying the $800 fee.

@John T.

You don't necessarily need money coming in but you do need to show that your business is ready.

items such as the below will indicate that your business is ready and you would be entitled to start deducting expenses.
1) having a rental unit ready to be occupied
2) advertising the unit to tenants
3) collecting tenant applications