All Forum Posts by: Bill Walston

Originally posted by Mark R.:

This should not be an issue though since my leisure days have been few compared to rental work days.

Just so you know, with prior planning, there are strategies to make nearly every day a "work" day - even if some of that day is spent on leisure activities. Tax law can be a wonderful thing :)

Yes it is.

Yet another vote for Dropbox!

Originally posted by Angel Verdejo:

I've been here 4 years and I don't have a lease. I will be moving but not till March 2012. I just don't want to be forced out by the new owners before March, that's why I have not yet put the house under contract. The landlord is ready to sign.

Angel, if you put the property under contract you are in a better position to negotiate with a potential new owner than if your landlord sells without your involvement. Make your lease a "part of the deal."

Originally posted by Mark R.:

Bill, that is what I would have thought also. According to Stephen Fishman's book "Every Landlord's Tax Deduction Guide", the travel days count, and he describes a clear example similar to my six day scenario.

Mark, if that is what Fishman is saying, then he is dead wrong.

Consider this from IRS Publication 463:

(You can grab a copy of PUB 463 here: http://www.irs.gov/pub/irs-pdf/p463.pdf)

So, before you can determine what, if any, travel expenses are deductible, you must FIRST determine the primary purpose of your trip. That determination is made in large part by looking at the business vs. personal activities you engage in at your destination.

I'm surprised that Fishman would say otherwise. It sounds as though you are assuming that the travel days are business days because they are greater than 300 miles away from your tax home and the travel time is more than 4 hours. That's simply not the case.

Based on PUB 463, and given the parameters that you have defined, I stand by my previous posts.

Originally posted by Mark R.:

Thanks Dave, the way I understand it is that the travel days count if it is over 300 miles or more than 4 hours each way.

The two travel days plus two rental days equals four and the entire trip is six days (two leisure days).

Ref. "Every Landlords Tax Deduction Guide" by Stephen Fishman

Mark, the point that Dave is making is that IF the trip is determined to be personal and NOT business related you do not get to deduct the expenses or mileage for the travel days. You need to consider the travel days as "neutral" - they may be either business or personal depending on the intent of the trip. That's determined by how you spend your time at your destination.

In the example that I responded to you used two days work on property and one day leisure - this is more than 50% business so that makes your travel days deductible.

With your SIX day example - two days work on rentals, two days leisure - you are at a 50/50 split between business and pleasure at your destination. The IRS would most likely consider this to be a trip intended for pleasure and disallow a deduction for your travel days. The expenses for your two work days would still be deductible.

Mark, I'm only coming up with five days, but I think I'm following you :-)

The expenses for your travel days and the days that you are working on your rentals are deductible. This includes mileage, lodging, incidentals and meals. (The meals are limited to a 50% deduction.) The expenses attributable to your "day of leisure" would NOT be deductible.

Split all expenses evenly between the properties except the expenses incurred on the day when working on a specific property. Those should be allocated to that property alone.

Hope this helps.

Originally posted by James Hamling:

Smell what I'm cooking?

And trust me on this point, I have litigated against some real fun cases before, like state agencies, you want some good times try that. And we won, twice.

Actually, I DO smell something - but it's not cooking.

James, I think you know as well as I that the state statutes governing corporations and limited liability companies are written to limit the personal liability of owners/members. It would take a court order to "pierce the veil" and I would dare say that I could most likely find a case where the veil was upheld for each that you find where it was pierced.

Why berate Mitch for asking Stephen to substantiate his statement? It was a valid question when the law is clearly written to limit the liability of owner/managers. It appeared to me that he was merely looking for information, not an argument.

Not being privy to the thought processes of your attorney, my best wild a$$ guess is that he/she is referring to a possible provision of your state's SAFE Act. There is no limitation on the number of loans which can be funded by a private lender. There may be a limit on the number that can be funded before the private lender would have to be licensed under the SAFE Act. SAFE Act laws may vary from state to state.

[By the way, it's my opinion (for what it's worth) that since you are not going to be the owner/occupant of the property the lender is funding the SAFE Act would not be applicable. In general, the Act applies only to residential mortgages made to owner-occupants.]

Originally posted by Bienes Raices:

Originally posted by Carole M.:

Attorneys will give you a free consultation.

um, not all of them do this...

My experience has been similar to Carole's . . most of the attorneys I have have had dealings with have offered a free consult. That being said, you could always ask "what does Attorney X charge for an initial consultation?" If the fee is a problem, don't set the appointment :-)

Check out Multi-Family Millions by Dave Lindahl. A great read!