All Forum Posts by: Edmund Ricker

Hi @Sabrina Savinski,

The IRS lets you deduct ordinary and necessary expenses required to manage, conserve, or maintain property that you rent to others.  You should be able to deduct your expenses as long as you were trying to rent the property.

Since I am not aware of your personal circumstances I cannot give you specific advice, but I would advise against doing your taxes online and find a qualified professional to help you.  A good tax pro may cost you hundreds, but could save you thousands.  Full disclosure:  I am a tax professional so I am admittedly biased.

Hope this helps.

Ed

@Rex Mortensen,

You don't need no stinkin' debt consolidation company.  Many of these companies are scams.  Organize your debt and attack either highest interest rate first (mathematical approach) or lowest balance first (Dave Ramsey approach.). Cut expenses, increase revenue, and ATTACK the debt.

It won't be easy but if it's important enough to you, you can make it happen.

Ed

@Erik Larson,

LLC's are for asset protection and do nothing for taxes. LLC's are generally used for buy and hold situations. You might consider an S-Corp for your flipping, especially if these flips will be short term.

I would recommend consulting your tax advisor who can examine your complete picture and give you the information you need to make an informed decision.

Ed

@Nick Stenger,

It can be done and it is not pushing the envelope as long as you have an area that is exclusively used for business within your home.  There are a couple ways to accomplish what you want to do.

You should consult your tax advisor to see which method works out to be most advantageous to your individual situation.

I would like to give you a more precise answer, but with taxes every individual has different circumstances.

Hope this helps.

Ed

@Raymond Hill,

Another consideration is that the asset protection afforded by the LLC and S-Corp are somewhat redundant. by having an LLC taxed as an S-Corp there is an extra layer of filing fees and administration necessary on an annual basis.

That is not to say that it is not appropriate, but it may be unnecessary.  I would consult your attorney to get a full picture of the pros and cons.

In general, using an S-Corp for flipping and holding rentals in one or several LLC's is pretty common. That being said, every situation is different and so seeking advice from your attorney/tax advisor is always money well spent.

Hope this helps.

Ed

@Dave S.,

The short answer is to make sure you pay them.  If you are paying the mortage payments on an existing mortgage on the property, and assuming your taxes and insurance are coming out of the escrow account associated with that mortgage, you should be able to deduct those items.

I would make sure that you have your attorney review the contract that you will enter into with the buyer, and also give a quick call to your tax advisor.  

I hope that helps.

Ed

@Kyle Frey,

I agree with @Steven Hamilton II.  I believe you have the correct analysis based on the facts you have presented.

In cases like yours, I like to look on the bright side.  You don't lose the losses, you just have to wait to use them.  I consider that a high quality problem.  Sorry that the resolution is not more immediate.

Ed

Hi @Sven D.,

I would spend a few extra dollars and get the services of a reputable attorney.  It is too important not to have it set up right. 

I know many beginners are trying to start out on a shoe string budget, as am I, but this is one area that I would highly recommend spending a little more money.  If you ever need this entity to stand up in court or to protect you in some way, it would be best if you knew it had been set up correctly.

Hope that helps.

Ed

@Ryan Murdock

That pretty much seals the deal for me.  I am going to take the class regardless of whether or not I get the license.

I plan to quit my 8-5 gig on 12/31/22 and be a self employed Accountant/Financial planner specializing in working with real estate investors and a real estate investor myself.

So this can only help with that.

Thanks again.

Ed

@Ryan Murdock

Thanks for the advice.  I think the biggest reason I want my real estate license is so I am not at the mercy of an agent.  A deal I have been eyeing for a few weeks just went under contract because I could not get inside to take a look before making an offer.  Not a huge issue because deals come and deals go, but I would like the freedom to be able to inspect and then let offers fly at will, if appropriate.  If that makes sense.

Thanks again,

Ed