All Forum Posts by: Frank S.

Hi BP, 

I read "Every Landlord's Tax Deduction Guide" by NOLO, great book.  I have a question regarding the cost basis for a property. 

Purchased:  69K, mid year during the tax year. Market value was about 85K.

Tax Assessment: 172 K (The city is nuts!)  I contested this and the tax was temporarily lowered to 40K.  They raised again to 172K.

Repairs took place over two tax years, I will ignore second tax year for now:  Tax year 1-  30 K in capital improvements. 

Total cost out of pocket:  99K. No mortgage, I refinanced after completion (tax year 2)

What would you use as the cost basis? 

My account indicates "purchased price plus capital improvements."  However, the property was purchased at a discount.  Can I use fair market value and tax assessment instead of actual cost?   The difference over 27.5 years is not that much, but I don't necessary agree with them. 

Imagine if you get a property at a heavy discount, or even inherited? How is the cost basis establish, then? 

Now, imagine if you overpay for a property, will the IRS allow you to depreciate the much larger cost or will they claim that you have a cap according to the fair market value and tax assessment?

Thanks, 

Frank

Great. I can walk home. I will be there.

Are they historic windows?  Have you consider restoring them?

http://thecraftsmanblog.com/replacement-windows-the-real-story/

The issues are not that bad.  $3500 is fair for part of the repairs, you may pay more.  It seems you were not that interested. 

Check your expenses. What about taxes, home insurance, and regular home ownership repairs?  Do you need a lawyer or account? Advertising?  Any upgrades or upcoming work?

Keep on searching and don't give up. It's not easy.

Frank

That's not too bad. Take a sample to home depot, match the stain color move on with your life. Unless, you want vacancy. Talk to your tenant and tell them next time is on them.

If you need financial advise, spend $1,000 consulting a fiduciary fee only (fee only is very important) financial advisor. One with real estate experience should be great. REI is good, but you need diversification. Your money in the bank is giving you negative returns by losing buying power due to inflation. Put it to work. You need to answer yourself a few questions. Where do you stand on your retirement path? Do you have enough insurance (Term only) ?How much are you "worth" to your dependents? How diversified are you on your investments? Those are not easy answers. Good luck,

Originally posted by @Kate J.:

Originally posted by @John C.:

@Federico Gutierrez :-) I guess the leaseholders are not biggerpockets members :-)

@Frank S. How difficult is it to evict someone in Chicago in the winter? I'd heard it was next to impossible due to the weather?

@Kate J. Definitely move fast. Particularly if it is a difficult as I thought to evict in winter in Chicago. I do agree you should try to get as much information on the current occupants/subleters as you can. Maybe have them fill out an application or at least get a copy of their ID? Make sure the lease signer knows that they are on the hook for everything and advise them to help return the unit as hopefully specified in the lease and Chicago's landlord-tenant laws "clean with no damages beyond normal wear and tear" or expect to have to foot the bill.

Good luck!

thanks! I replied above, they did not even save the copy of lease. I will ask about the copy of the ID, but have serious doubts they have it. I feel for them actually, they are just kids (around 19-21), but I am surprised they did not even google this "tenant". I just received an email from one of them, and it feels they are actually afraid of him, since he said something like "we are OK, he is in his room". More importantly, I feel disgust that someone can actually behave like that, but it's a good lesson, I will learn it for sure.

 Kids have parents. Are their parents co-signers? If not, consider that.

Good luck. However, you need to tighten your rules a bit. 

Federico, see this  for evictions.

https://www.biggerpockets.com/forums/52/topics/247...

Hi there,

We have a tenant friendly City, but the law can help.  Get a lawyer.  Read the Chicago tenant ordinance.  

https://www.cityofchicago.org/city/en/depts/dcd/su...

What lease did you use?  Do you have a clause indicating subleasing is not allowed? 

If so, your current tenant, not the squatter necessarily, will be responsible for the performance of the Lease.  You may want to file for eviction before the lease expires, this way you can include your current tenants and the squatter. 

Do not accept any money from the squatter.  The contract is with your tenants.  If you do, you may have a month to month tenant.

Start by talking to your tenants ASAP.  Tell them they are in violation of the lease.   Tell them that you will file for eviction BEFORE  their tenancy ends if the squatter doesn't leave.   Do you know where they are moving?  Get that info so  you can call their future landlord?  You can get this info by telling them you will mail their security check there. Do you have a security deposit?  Do you have the squatter's ID?  Get that so you can sue.  An eviction will set you up 4 months if you do it right. 

Immediately issue a 10 day notice, indicate that subleasing is not required, and ask them to remove all non authorized residents from your place within 10 days.  If this doesn't work, file for eviction. 

If you choose to keep the squatter run a background check asap.

Noise happens late (or early), 1:00 am.  That's absolutely not acceptable. 

Originally posted by @Deanna McCormick:

Here is what I judged the noise level on,

Inside if I'm standing outside the closed apartment door and can hear loud music, in the hallway, it's too loud.

If I can stand outside the building and hear noise it's to loud. With open windows during summer noise travels, and you can advise to keep windows shut if music is on. 

Foot traffic walking, is hard to muffle and if upper floor is a heavy walker it's going to be more of a issue.

Basically unless the upper level tenant is really loud, stero, TV, shouting, have your lower level tenant call you when this is going on and basically go over and see if it's really as bad as they say. Of course lower level tenant can call police but if it's not within the spectrum of the above they will just leave.

If you give this tenant notice your setting yourself up to do the same with the next tenant, the lower level people might just be sensitive.. 

It's worth a trip over to check and see for yourself. 

 Great points.  Thanks a lot.