All Forum Posts by: David C.

I suspect that they are talking about the benefit of depreciation expense.

disclaimer: not an accountant, not tax advice, not legal advice.

A % of the value of the property you are invested in can be taken as an expense on your taxes each year - this is somewhere around 1/30th of the value(I think you can't count the land, just the building) - and the years are probably tricker than 30 like 27.5 or different based on the property.

But say you are a successful doctor - you make 400k/year and are in a very high tax bracket. All you short term gains are taxed at a very high rate - because they 'sit on top' of your income.

If you buy a million dollar property - each you can take roughly 30,000 in 'depreciation expense' - even though the cash is not leaving your pocket. You use that to offset your net income from the property and if the income is lower than that - it can offset other investment income, and eventually even 3,000 of your doctor income.

You get nailed on this when you sell - because deprecation reduces you 'cost basis' - so your 'gain' gets bigger - even if you sell it for the same 1 million after 30 years, instead of having no gain, you have depreciated it down to zero, so you have a million dollar gain. This can be avoided by dying and letting someone inherit it (the cost basis goes back up) - or by doing a 1031 exchange where you sell one property and re-invest. Often these investors keep 1031'ing into bigger and bigger properties as they use up the depreciation on each one.

Numbers are very rough - explanation probably has a few flaws - but this is the basics.

He's still paying whatever the interest rate is. Getting to the end of the amortization has lower interest only because you are paying interest on a lower balance. There's no other magic happening.

a 12% loan is a 12% loan in year one and in year 5.

In year one - its 12% of a high balance.

In year 5 its 12% of a small balance.

What is the rate on this loan?

This is what I'm picturing when you describe it:

http://www.homestyler.com/designprofile/e072bba5-fd9c-41ac-9e64-edec6f9d1f02

this is close to what you are suggesting, but it seems like you want to break the L and put the 'bar' on the right side? In my example, I'd make the range area thicker and put seats in the living room facing into the kitchen as a breakfast bar.

by the top door I'd try to see if you can fit: fridge, tiny counter, sink, corner cabinet.

turn the corner to: dishwasher, then range, then storage cabinet.

@Damien Clark

I think you can fix this without the exterior changes headache, that's why I keep focusing on not changing that outside wall. And you are pretty set on 'opening it up' - as long as you are modifying that wall - I think you could save some by fixing all your problems on that one wall. Maybe I'm overestimating the cost and nuisance of removing that window?

can you do a drawing showing a box for the kitchen and the living room?

Is it one big rectangle like my last one, or L shaped? is the 'kitchen in a line down the wall' a non-starter because the wall turns left there?

Are you near a computer? I'd enjoy a screen-sharing conference call if you have the time - I can pull up that software and we can play with it.

I have a GotoMeeting account.

@Damien Clark

no dining room kills the island designs I guess, you can't really have a house with no room for a table for eating, right?

How big is the living room you are combining?

http://www.homestyler.com/designprofile/13bfa89d-7848-43cf-a966-4a4bf43dfd98

@Daniel Keirstead did you see the links I provided earlier in the thread?

Does the home have a dining room? if so, I'd really think about the island, seated dining can be taken care of in the dining room.

my opinion is really not worth that much on this stuff, there are people here with actual experience.

I think of open concept as having consistent flooring.

In my own home I didn't want hardwood in my kitchen in case it got wet and swelled, so I have different kitchen floor. For a flip I'd do the hardwood, other people prefer how it would look all with one floor - most are not so cautious.

If it was a rental, I'd do tile or vinyl due to water concerns.

My biggest issue with your kitchen is the lack of counter space on both sides of the sink. If you do the 'back wall' with the fridge, can you move the range over there too? But I guess that's a flow problem not having the range by the sink. But many people do the range-in-the-island or sink-in-the-island so having them separate is common.

no feedback? @Adam Patterson

@Damien Clark

c'mon! did the links work for you?

if you search 'island with column' on houzz.com you'll see many examples, I'm guessing many of those columns exist to run power to an island.