All Forum Posts by: Bob Norton

Generally, you capitalize your renovations until you place the rental unit in service. So, in your scenario, you would not deduct any renovation costs made in December and you would have to depreciate them beginning in January.

If you lived in your residence for less than two years and had to sell it due to an unforseeable event, then you get a partial exemption based on the period of time you lived in the home.

@Vinoth Amar If you purchase the property, rent it out, and do not spend more than 14 days in the property during the year, you will be able to treat it as a normal rental property for tax purposes.  How the lender classifies the loan has no bearing on how you treat the property for tax purposes.

@Stuart Dangar Sounds like you are talking to the wrong type of lenders.  You should talk to a commercial lender.

@Eric Mcginn To answer your first question, yes, it is too late to spend money on repairs for your 2019 tax return.  For your second question, you should not have to pay taxes on the insurance settlement since your property was impaired by the easement.  You should consult with a CPA on how to handle the settlement on your tax return.

@Xavian Rimmer Welcome to BP! Make sure you check out any local REIA meetups in your area. You'll make lots of great connections at those meetings.

@Colin Spivey You should consult with a CPA when you start your business.  If you get a real estate agent license, then you have started a business and if you buy a rental property, then you also have started a business.  I agree with @Anthony Wick that you should attend REIA meetings in your area and ask for references to a CPA. I'd recommend one that also invests in real estate, since they will have researched the tax laws for their own benefit and this will benefit you as well.

Last year, I began working with a realtor that was also flipping houses.  After I reviewed her tax returns, I told her "Congratulations, you have set up your companies to maximize your taxes!"  I began helping her restructure everything to mitigate the damage and to minimize her taxes in the future.

So, seeking the advice of a competent CPA when you begin in business will save you money in the long run.

@Shubho Ghosh Did you run your numbers through the Fix and Flip calculator on BP?  The numbers look way too thin for this to highly profitable.  You are missing sales and closing costs, for one.  You are not including your financing and holding costs, for another.  Assuming your rehab estimates are accurate, you should look to spend no more than $189k for this house.

@Adam Hyder Thanks, Adam!  

@Franklin Logan You will have to hire an attorney to pursue your options.  If you paid your taxes each year you owned it and the county sold the property for a prior year tax bill, then you should be able to make a claim on your title insurance.  Hopefully, you purchased that insurance when you bought the property.