All Forum Posts by: Basit Siddiqi

Your profile mentions that you may have a business providing maintenenance services to clients. 
If you do, you may want to see if potentially setting up an S-Corp would save on self-employment taxes.

One often overlooked item for those who invest in Ohio is not filing the locality returns.

Ohio is a unique state where they require locality returns to be filed in addition to the state return.

I was reading through your other biggerpockets posts and it appears that you are involved in short-term rentals

While there are many similarities from a tax persepctive between STR and LTR, there are some differences.

The main thing you want to discuss is whether the STR is considered active or passive. If it is considered passive, you can potentially offset the rental loss with your other forms of income.

Detroit is one of the few municipalities in the nation that has their own separate filing obligation. Make sure to work with a professional who understands this. I often see this missed.

The property appreciated about $40,000 over 2 years which is $20,000 every year.

$20,000 / $102,100 is about 20% which is a hard return to beat
You are likely cash-flow negative by a few percentage points but it looks like you are getting atleast 15% return.

The good thing about Texas is that the state does not have a state income tax.
The only potential filing oblgation that you can have with Texas is if you have an LLC and therefore required to file a franchise tax obligation.

There is a lot of recent discussion about short-term rentals. However, I have a preference of long-term rentals for long-term wealth building.

it is less time-consuming and you can shelter the cash-flow with depreciation.
Therefore, the cash-flow and appreciation grow tax-free.

The good thing about Texas is that the state does not have an individual income tax.
The only potential filing obligation with Texas is if you have an LLC / Entity and might have to file a franchise tax return.

Your BP profile mentions that you are a flipper. You may want to see if an S-Corp is beneficial to you to avoid paying self-employment taxes.

When you mention $750 - $1,000 over the standard monthly costs, are you only factoring in the mortgage payment or also factoring in repair / capex / vacancy reserves?

Furthermore, you should calculate your cash on cash return instead on what the FMV is of the property instead of what you brought it for.

The value of $500,000 tax free is about $125,000 if you assume 15% federal taxes and another 10% in california state taxes.

It looks like you will be doing a house-hack.

It is normally not required to inform the lender.

The rents received will be considered rental income and have to be reported on your tax return.