All Forum Posts by: Bob Norton

@Jonathan M Bojan You'll want to use an LLC for your strategy. If you use an S-Corp, then the losses will be hung up in the at-risk rules, because the shareholders will not be able to use the company debt as part of their basis. Aside from that, I think you will find it hard to continually generate losses like you envision.

@Marc DeLuca If the properties are owned by a trust, then the trustee is who you need to contact.  I'd mail a letter to the address for the trust that's in the city tax records.  You can also try mailing a letter to the address, in case their is a forwarding address.  And, you can run a skip trace on the owner you identified.  Talk to the neighbors to see if they know the owner.  Try running a search through the obituaries to see if the owner passed away and has any relatives that you can contact.  These are a few ideas you can use and it's certainly not an exhaustive list.

@Eric Miller How you finance your properties does not matter for taxes.  If you convert the property into a rental, then you can deduct the expenses related to that rental, including the interest paid on the mortgage.  You can also do a cost seg on the property; however, whether or not you will benefit from the bonus depreciation, depends upon several other factors. (None of which is the financing).

@Bingji Wang I'm pretty sure that you will be paid for your tax certificate, plus penalties and interest due, if the property owner pays all the back taxes.  

@Raza Rizvi You have 180 days to reinvest your capital gains into a QOF and defer the gains.  So, if you created the QOF a month after your realized your capital gains from the sale of stocks, then you can defer those capital gains for 2020.  The QOF has 30 months to purchase and substantially improve real estate in an opportunity zone.  The QOF can also invest its funds into another QOF.

@Manish Shah Check out the accountants in the BP directory.  Contact several for a discussion and see who is the best fit for what you have in mind.

@Rob King You could your rental for the full exemption and would pay tax on any depreciation recapture.  You'd have to live in your current residence until you met the 2 year mark (+ 1 day) and then you could rent it out until two years had passed from selling the first property.  Then, you would get the full exemption on that property ad would pay tax on any depreciation recapture.  

If you wanted to sell both within a short time of each other, then I would recommend living in your current property until January like you plan and sell it for the full exemption.  Then do a 1031 exchange on your rental to defer that gain.

@Charlie Bear Since you are self-employed, you should talk to commercial bankers, not mortgage brokers. The mortgage brokers deal in residential loans, and they can only make loans that they can resell, so they have to follow a checklist that excludes most self-employed persons. Alternatively, you could look into the BRRRR strategy using a private lender. With your funds and a private lender, you could purchase the deal, fix it up, get it rented, and the refinance the deal and pay back your private lender.

@Steve K. Don't use your SSN.  The custodian of your IRAs should have an EIN setup to use for this and you will need to use their EIN.  Call them to get that tax ID.

@Gabriel Mortensen You have the right idea.  As a gift, your basis will be that of your father-in-law's, plus any rehab costs you invest to make it livable.  Your father-in-law will have to file a gift tax return with the IRS, but there should be no tax due for the gift at this point (that will depend upon the estate tax exclusion at the time of his death).  If you were to sell it, then you would owe tax on the gain.  However, since you intend to turn it into a rental, you will not owe any tax on the loan proceeds that you cash out of the property.  You do have the option of moving into the property and living there for two years before you sell it to get a $500k exclusion from tax for the gain.  I like your idea of renting it and using the equity to fund additional purchases.