All Forum Posts by: Basit Siddiqi

@Domonick S.

I did a quick search to see if any other BP member from Oahu requested a CPA and I found one hit

https://www.biggerpockets.com/forums/554/topics/51...

Maybe you can reach out to the posters in that thread to see who they decided to use.

You may also get some recommendations from a local REIA event.

If you are still unable to find a CPA - feel free to interview some CPA's that work with investors remotely. There are a couple CPA's here on this website that do so.

Where did you purchase your properties? Your profile indicates that you interested in areas all across the United States. Be mindful that you may be required to file a state tax return in states that you invest in. 

@Alex M.

You can find real estate networking events through the events section of biggerpockets.com or through groups on meetup.com

Below are links to future events in NYC using the events section
https://www.biggerpockets.com/forums/521-events-an...

Below are links to Meetup groups focusing on real estate in NYC
https://www.meetup.com/queens-real-estate-investor...
https://www.meetup.com/incomepropertiesportfolio-n...
https://www.meetup.com/New-York-Real-Estate-Invest...
https://www.meetup.com/NJREIGroup/

Pro
Increase current year depreciation expense for current year and near future years which results in a decrease of taxable income.

Cons
You have to pay money to engineers to perform the study
You have to pay accountants extra money due to a more complex tax situation.
Taxpayers who are not real estate professionals by the IRS may not get an immediate benefit from a cost seg study

@Bruna P.

I would sell the property and purchase properties lower in value.

the general rule is that if you buy homes at $150,000 or below there is a great chance of the property cash-flowing. Once you hit the $300,000 range; it is very hard to cash flow; at this price range you are likely playing the appreciation game.

Your gain would be less than $40,000-$50,000 because you also have to factor in the improvements you made to the house. These amounts get added to the basis and reduce your gain.
furthermore, It should also be noted that since you lived in the home for 2 years - you would qualify to exclude up to 250,000/500,000(MFJ) of the gain under the current tax code.

@Joe Capobianco

Congrats on the new home purchase!

You should be receiving a 1098 from your mortgage company that will reflect any mortgage interest, real estate taxes and mortgage insurance premiums paid to the mortgage company.

You will report these amounts on schedule A.

Calculate how much Itemized deductions you are entitled to and compare it to the standard deduction. You will want to use the one that provides you the greater deduction.

Another note it to look at the HUD statement. There may be instances that you paid interest/real estate taxes that are not reported on the form 1098.

Also - if the mortgage company does not pay the real estate taxes - you will want to make sure you report the amount that you paid on schedule A.

Feel free to ask me any questions at the time that you prepare the tax return if you decide to self-prepare it.

@William Crutcher - I compiled a list of recent BP postings that requested a CPA in the Cincinnati Area

https://www.biggerpockets.com/forums/81/topics/493...
https://www.biggerpockets.com/forums/86/topics/144...
https://www.biggerpockets.com/forums/51/topics/250...

I compiled a list of recent BP Postings that requested a lawyer in the Cincinnati Area

https://www.biggerpockets.com/forums/51/topics/416...
https://www.biggerpockets.com/forums/51/topics/396...

Feel free to reach out to the posts of the above postings on who they decided to go with and if they are satisfied with their services.

You may also want to attend a local REIA and network with the professionals there and ask who they use as a CPA

You may want to open up your search to CPA's that work with clients remotely if you are unable to connect with a Local CPA.
In the meantime - feel free to ask me any tax questions that you have.

How many years did you live in the house before you went ahead with the rent to own and eventual sale?

If you decide to go the LLC route you should set up the LLC in Georgia.

If you create the LLC in Florida you would need to register the LLC to do business in Georgia.

Normally you want to create the LLC in the state that the property is located in.

@Aubrey P.

Linda provided you strong advice. I agree with everything she mentioned.

Question though - Why do you have such a keen interest in their situation. This is your friend's parents house and will pass down to their children.
Are you trying to buy it from the children when they inherit the property?

@Ryan Duquette

1) You should reach out to an attorney to draft up an operating agreement/partnership agreement. The agreement will mention how income/losses will be allocated among the partners, responsibility of each partner, actions that will cause a dissolution etc.
2) reach out to a commercial/portfolio/hard money lender. A partnership is not eligible for conventional loans. Each lender will have different terms and rates so its best to call as many as possible to find the one with terms that you like.
3) There may be some benefits with creating an S-corp or an LLC taxed as an S-corp for a fix and flip business.
4) reach out to an CPA to prepare the partnership return. The partnership return will distribute a K-1 to each investor based on the partnership's activity. The K-1 then gets reported on the individual taxpayer's return.

@Arthur Voskanyan 
Airbnb Income can either be taxed as passive income from rental activities or ordinary income that is also subject to self-employment tax.

Factors such as the type of services you provide the tenant and the length of stay are factors that will determine how it is taxed.
Shorter stay and more services provide suggestion that is should be taxed as ordinary income.