All Forum Posts by: Christopher Smith

There are exceptions in the new law where the property's value does not step up for property tax purposes (you'll need to review it). BTW - This was billed as a huuuuuuuge tax saver for the people of Ca by the State, they snookered us again, its actually much more of a big tax increase, than a decrease for the handful of folks who might benefit. 

What's that old Who song "Then I'll get on my knees and pray...............  We don't get fooled again, no no"

How do you know when the State of California is lying about taxes? Its lips move. 

Nothing (generally), it's not directly relevant to income tax reporting (i.e., payments of principal are not deductible to you the payor, and a return of borrowed funds to the lender payee).

What does NEC stand for?

Each LLC (formed in CA or out) will cost you an $800 minimum CA franchise tax fee for each year you file if you are a CA resident. That's one big chunk of change if these are single family homes.

My experience tells me if you really want to take these things on yourself you can, but you're going to need to roll up your sleeves and do some real due diligence research, or simply turn it over to an attorney who will do it for you. I've probated a couple of large estates on my own, and I was assured at the beginning of the process there was no way I could do it without being a practicing probate attorney. That turned out not to be true, but it required a fair amount of work on my end getting the proper guidance and resources, and then mastering those tools so I could very successfully probate the estates entirely alone.

Ironically the attorney who thought he was going to probate the estates snooped through all my filings at the probate court and even had the nerve to bill me for a couple hours of time for having done so. I paid him because it gave me a little satisfaction to know that after his review he knew he was out of a job (at least as far as those estates were concerned). So take it on and beat them at their own game, but be prepared for a little time in the trenches.

What is the other legal entity and how is it taxed?

Let me caveat my earlier comment. I assume of course you have some familiarity with operating agreements if you plan to take this process on yourself. I have had a fair amount of experience so I am familiar enough to assume the risk. If you are not then of course you should seek review by an attorney before you finalize anything.

Might also consider if that would be a violation of Federal Bankruptcy laws (e.g., preferential transfers, etc.). Not sure I would be taking recommendations relating to amounts that may be under the jurisdiction of a bankruptcy court proceeding from the very person who has filed or will be filing the bankruptcy petition.

You can often find sample JV agreements using basic search terms. I did mine that way, I found a simple family investment partnership agreement and used that (it was not strictly real estate related, so it won't work for what you want). In any event, I just tweaked that agreement a little for my specific fact pattern and that was it. Worked very well for years until I decided to dissolve the partnership a couple of years ago.