All Forum Posts by: Brian Schmelzlen

Yes, it is true that we have a good idea about how major parts of the law will look based on similarities between the House and Senate bills. Both eliminated the state income tax deduction, so that is gone. That one hurts, but my projections based off of the initial proposals showed in my case (and a lot of hypotheticals I ran for my firm’s tax blog) showed that most people still benefit due to lower tax rates, expanded tax brackets, benefits to business owners and investors, and elimination of AMT (which sadly was only modified and not eliminated in the amended Senate bill).

Hello Angel. Always good to see San Diegans getting into the REI game even with our crazy market.

You really have to get to know your market. J Scott, I believe, gives advice on this in his flipping book in the BP bookstore.

Jay, that makes sense but even with the Senate approving a bill last night we don’t know what the final version of the bill will be. There are a number of differences between the House and Senate bills.

It seems if you factor in vacancy, at least for the first house, you may have a negative cash flow there as well. Unless you are counting on significant continuing appreciation, it may make sense to sell and buy better cash flowing properties. Talk to your CPA to make sure you qualify for Section 121 on your first house and 1031 on your second.

Michael, it depends upon a lot of factors. For people involved with REI, it depends upon what you want to do with the business as there are different tax rules based on type of entity. For holding rentals, I generally recommend an LLC if you are setting up an entity at all. For flipping and development, I generally recommend an S corp. For wholesaling, my recommendation would depend more upon your specific business.

Nicholas, it actually got amended to 23% deduction. The wages reference only matters if your business pays wages, and your taxable income is over $500,000.

You can still deduct the interest on Schedule E if it is a rental.

Demand your earnest money back. The seller is sketchy at a minimum.

Its all about running your numbers.

It sounds like your long-term goal is to have a large portfolio of rentals.

Therefore, if the ARV of a property will generate a strong profit for you and the cash flow isn't great (or you can use your profits to purchase another property with better cash flow), sell it.

If a property generates great cash flow for you, keep it.