All Forum Posts by: Daniel Dietz

@Michael Plaks, I am wondering if you could explain it in 'reverse' - meaning how does Capital Gains affect 'regular income' (such as W2) tax rate?

Let's say a couple has 105K of W2 income and uses the standard deduction and has a 'taxable income' of 80K (rounded), so they are in the 12% bracket for Federal Taxes.

If we now add 100K of capital gains that is taxable they are at a total of 180K of taxable income.

So I assume from what has been explained so far the Capital Gains Rate would be 15% since their 'total taxable income' is above 80K. 

But what happens the their tax rate on their 'regular taxable income'? Does THAT rate ALSO 'go up' since their 'total taxable income' is 180K? Are they now in the 24% bracket?

Thanks, Dan Dietz

@Margaret Feit I am not familiar with using the SDIRA for syndications, just buy and hold rentals. I *think* you are correct that you can carry those losses forward in your case, but not sure. 

I would contact one of the Tax or Self Directed experts here on BP, such as @Steven Hamilton II @Amanda Han (her books available here are excellent too) @Brandon Hall or

@Dmitriy Fomichenko @Carl Fischer or @Brian Eastman.

Your provider of your plan should also be able to guide you a bit or put you in touch with a qualified Tax Professional.

Dan Dietz

@Taylor L. when I recently talked to a well know syndicator who is often active here on BP this is what they shared with me........

"SEC placed limits on how much sophisticated investors can invest in the recent upgrade to the law. I believe if you make under $100,000 you can invest no more than 5% of either your income or net worth, and if you make over $100,000 that goes up to 10%. He neither case this does not need our minimums. This is a new thing as of about 2 months ago."

I can't find the recent changes right now, but I did the other day. The SEC makes it sound like they are 'protecting us' sophisticated investors ..... I say they are screwing up my plans :-(.

Dan Dietz

Hello All, 
Both I and my current investing partner for buy-n-holds have been interested in investing in Syndication some time in the near future. They are Accredited and I am not, but qualify as 'Sophisticated'. Due to recent rule changes limiting how much sophisticated investors can put into a syndication it sounds like most Syndicators are no longer going to allow their participation. 

I am wondering if there is a legal way for me to invest in conjunction with my partner by either giving them, loaning them or some other form other than an actual partnership where the investing would be done in their name only?

Not trying to break any rules, just see what the options are :-) An example would be that years ago we 'flipped a lot' where we each put in half the money but it was all done in their name. We split things 50-50 after capital gains taxes - so something like that.

Thanks, Dan Dietz

I am sure some of the Pros will chime in too, but I would get in Contact with Mark Kohler or Mat Sorensen's office at KKOS Lawyers and Accounting. They have TONS of Youtube stuff on SDIRAs, SOLO401Ks, Estate Planning etc... along with Small Business stuff. They also have a 'plan provider' branch called Directed IRA (that also deals with SOLO401Ks etc.. too)

They would know the answers and if there is any alternatives for you. I had them set up several different Multi-member LLC made up of all 'members' being some form of Self Directs Accounts and we were more than happy with their knowledge and service.
Dan

Interesting discussion. I have never heard this particular job being brought up in regards to REP status. 

I agree that it might have a high chance of being questionable if audited. 

I can also see the argument being made that if 'construction and reconstruction' are eligible, is Inspection not a normal part of that? Being a full time contractor myself, I could see posing the question of "What constitutes 'construction'? Just the carpenter/general? What about all of the other Trades like plumbing, electrical, siding, HVAC, flooring, inspections"?

@Todd Rasmussen that is a GREAT point about the Opportunity Cost of doing that. In *my* case I am only interested in doing this on my personal home mostly for 'peace of mind' and my goal is to have it done in 10-15 years when I hope to retire from my 'day job', and it would be nice not to have that coming out of our cash flow at that time.

I dont have any interest in paying down my investment properties due to exactly what you are saying about opportunity cost of those funds. Part of my plan is to use excess cash flow from all of them and use that for down payment on a few more. Then about the time of retirement I plan to start using that cash flow in a "payoff snowball" and putting it all towards the smallest mortgage. This again would add to peace of mind, and open up the option to sell of some of them using Owner Financing since they would be free and clear.

I will try to explain how we do it in relation to how you explained things.

We have a 3 way LLC that we intend to hold rentals in for the long run, but covered many of the situations on our OA that @Curt Smith mentioned above.

Each of us own 33.33%. We actually have several different LLCs for traditionally held properties, SDIRA held ones and SOLO401K ones. All the same but some with leverage and some just cash.

One the leverage ones it might look like this - say we purchased for 300K with 60K down and a 240K loan. We EACH but 20K down and all had to sign the loan. Fast forward 10 years and it might be worth 390K and we still own 180K, giving us 210K of equity, or 70K each.

If one partner, or their heirs, wants out, the remaining partners could likley refinance with a 300K loan, paying off the 180K loan, the 70K of equity to the departing partner with 50K left to split, or 25K each.

IF interest rates had gone up too much and we didn't *want* to refinance to buy the departing partner out, we would each have to come up with 35K from somewhere obviously.

This could from several sources;

1) cash from each of us

2) selling other real estate to cash out that equity

3) We could see if they wanted to 'carry a note' of 70K (the same amount of their equity) at a set interest rate. This would effectively act like a HELOC. We are actually going to be doing one of these in our partnership this year.

4)If *we* are not interested in buying this share somehow (highly unlikely) they would be able to sell it to someone else. 

@Todd Rasmussen makes for good points. I took a look at it and I think at this time I am not going to go down that road, but a resource that helped me is "The Kwak Brothers". They have some good Youtube content on the subject and also offer a free 'calculator' that helps you figure potential savings. 

That calculator helped me figure out in *my* situation I will just stick with paying a lot of extra principal when I can and keep my HELOC on the side unused but still there for emergencies or opportunities. It *seems* to me (not sure if this is 100% accurate" that a big part of paying things off faster is using 'extra cash flow' to pay down the principal. I am *already* doing that, and am pretty good with a mortgage calculator to know how to adjust things when/if needed.

@Oleg Malkin I think I have heard Brandon Hall mention the 'grouping' in regards to "Real Estate Professional" status. IF I remember correctly it had to do with satisfying the 'requirements' to meet the REP status. 

This is a different, but potentially related issue as passive losses and gains being discussed here.

Dan Dietz