All Forum Posts by: Brett Sorenson

I have two duplexes and am also a CPA. You should be able to find plenty of accountants that are well versed in real estate taxation. Good luck shopping around. In the end just find someone you trust and work to develop a productive long term relationship with them.

Welcome to BP! It is definitely a great resource. I haven't attended any meet ups in the cities so hopefully another can add resources regarding that. Any specific locations in Minneapolis you are looking at ?

Rick, you will need to find a new accountant to help you with what Taylor is suggesting (I am a CPA) as well. 481(a) adjustments aren't something a "run of the mill" tax preparer deals with so I would bite the bullet and and pay the fees. It will be well worth it and you will know your taxes have been prepared correctly. Still mind boggling that depreciation wasn't taken on the rental property. Hang in there and good luck. 

Start depreciating it Rick. I take it you have been preparing your own taxes?

I would be more considered about the quality of tenants and the overall "vibe" of the area over the competition aspect etc. There are many streets like that in Minneapolis and for the most part they do well. I own a duplex on a street that is about 50/50 duplex vs single families and have no complaints.

Jackie, unfortunately with the current market you won't find anything for that price. Tear down rebuilds are currently being built across the southwest and Linden Hills specifically has tear downs going for 275-325k. My mom recently acquired a lot near Harriet for 650k. That is one of the more exclusive areas in Minnesota. I own a duplex off "eat street" (38th and Nicollet) and that area has had a large uptick in outside investors and is really turning into a great area. I would give those neighborhoods a try. They are much more reasonable.

Merrill Delimont Well, next year let's not have the tax planning start on December 30th but contributing to an IRA could reduce taxable income as someone stated above. But if all of your deductions have been taken then it looks like you would be taxed on that amount. If you are trying to have a growing real estate business showing some income on a tax return is beneficial in the sense that it will be used by lenders in your overall borrowing potential. For example - in 2016 i had many repairs on my duplex and will show a little loss. In 2017 I project about 10k in taxable income. Now I would prefer not to hand the government all of that money so I will likely try and purchase another property to offset it. In the end be honest when reporting your income. Of course the likelihood of being audited is low but if you were ever audited and it was found that you had make fraudulent claims there are endless amounts of repercussions to haunt you going forward.

Merrill, I am a CPA. Ask away... But yes... if at the end of the year you have 10,000 of income in excess of all cash expenses (principal doesn't count) you will then get one last deduction of depreciation and generally speaking that will be the taxable amount. Sometimes if an investor has one property that is a home run and they know they will cashflow well and end up with a substantial tax burden at year end they buy a second property that "loses" money on paper to offset the taxable gains from first property etc.

Travis Colsen Well much of real estate investing is having a strong network and putting yourself out there a bit. What is your price range ? I currently have a rather strong pipeline (10-20 listings) that are off market and won't hit mls until the spring. 10 plex in south St. Paul for 600k. Going on Mls in spring for 699. Surround yourself with people you trust.

So I am a CPA but I would need to see exactly what you are all running through quickbooks to give the best answer etc. But.. as originally posted I said cash increased and then the corresponding liability increased. This would be assuming the cash was received in the business account which is likely what owns the property. What type of entity is the business? Now, let's say that you then wanted to take this cash out and "distribute" it to the partners. This would be a credit to cash to take the dollars out of the bank account and then a debit to distributions. Keep in mind distributions can have tax implications etc. and that is where (depending on what you are planning) you might want to sit down and make a tax plan going forward.