All Forum Posts by: Buddy Holmes

Sorry for any confusion.  The short sale house was originally owned by this family.  End of story on it.  The family wanted a place to live, found the new horse farm.

They contacted my (now) RE Broker and Mortgage broker.  My RE broker came up with the solution and I invested my credit mainly and some money to make it happen.

Hope that helps.

BTW Go Gators

BS Aero Engineering 63

@Susan O.,

The 750+ hrs does allow you to write off REI losses against your W2 income, buy....

Not only W2 income.  As you may find out once retired, Your Uncle wants his share of your pension, the SS he gives you the mandatory withdrawal he makes you take out of your IRS and 401K accounts each year.

The 750+ hrs then offsets these income taxes as well!

I am new to BP and listening to the podcast from the very beginning. I just finished with show 004 with @Frank Gallinelli. His discussion of Triple Net commercial property came from a different perspective than my earlier understanding of CVS, Walgreens, etc. I suddenly realized that a good deal my RE Broker came to me last summer with, is in fact a Triple Net SFR Investment! Has anyone else had one of these? The back ground is that my RE Broker host a local RE radio show. A couple came to him with their problem of needing to move out of their home which was involved with a short sale. They had found another property with some acreage (they had horses) and asked him how can they buy it.

He put them in touch with his (now mine as well) mortgage broker to discuss. Both these RE and Mortgage Brokers are "out side the box" thinkers. The Mortgage Broker toldd them that they were financially set to buy the new property but they needed to wait three years for their credit to clear for a loan. But once they were clear they could get a great deal on Department of Agriculture Loan with as little as 3.5% down on this property. With the family's approval, the two brokers got together and came up with what is in fact a NNN Investment deal on a 5 acre horse farm and home.

The deal was offered to me, and after some back and forth negotiations once the first sales price set,

was the following:

I would buy the property on a 20% DP conventional mortgage (My RE and $ Brokers both win)

The future Owners place a nearly 20% cash deposit on a signed Sales Agreement to buy the property in 36-48 months for a price that allow some modest appreciation and escalates abit after the 36th month for incentive to close.

The family signs an Occupancy Contract (not a lease or rental agreement) which sets the monthly fee (rent) to be $150 over the cost of Mortgage, Taxes and Insurance. In addition the contract specifies that they are responsible for all maintenance and repairs and compliance with local regulations.  They are able to add improvements (it needed a horse corral (yard) with fence, etc as long as they did not involve anything with might lower property value.   Nearly through the first year and the deal is working like clock work.  

I see this a Win-Win for all involved. The family got a beautiful brick completely new rehab (roof, HVAC, flooring, cabinets, baths, kitchen, appliances.. as well as their horse farm in a quiet setting. I am getting a good CAP and will get a good ROI in another couple of years. My two brokers got their fees.

I ordered the "Tax Strategies for the Savvy Real Estate Investor" Book by @Matthew MacFarland and have almost finished reading.

It is a fantastic read. It covers about everything I have gleaned over my decade of doing my taxes with SFR properties and some new nuggets for me to explore. I am blown away by the section on Solo 401k rules!

My step son qualifies and I have sent him a heads up. I would love to use it but as a retired Investor I have no W2 or Schedule C income. Is there a way to qualify using pension, Schedule E, MRD IRA withdrawals?

@Steven Hamilton II,

May I ask if you use QuickBooks for Investors to provide you their info for consultations and tax prep? If so what version is best to use for RE Investment, Buy and Hold and DST's?

@Steven Hamilton II, @Natalie Kolodij , in another discussion recommended you as someone very experienced in DST taxes. I have a few now but they are in self directed IRA's, I am assuming that there are no tax issues with them. The DST all have non-recourse loans.

But my current plan is do do a 1031 exchange into some more DST's. May I ask a couple of questions on tax issue with them?

Cheer,

Buddy

Thanks @Steven Hamilton II,  I guess I have been seeing your pick up business from the other side.

TT offers the audit protection you pick up for $60 to the TT user. How does a CPA work if an audit comes along? I used a local CPA for a couple of years, giving him my TT prepared output as a guide and all the other data he asked for. I only had one SFR in FL at the time and I was a new resident of SC. The CPA filed my FED and SC for two years. Come to find out SC does not allow for out of State Sched E losses. They came back with a bill and penalties and my CPA said sorry that must have slipped through!

His files were different but always close to my TT results so I said enough with CPS's and went back to TT.

I know this can't be used as a cloud on all CPA's (My step son is one in CA) but it was a bad taste.

Again thanks for your thoughts and discussion.  I had done some Quick Books work for my Church as a easy way to pass over data for their tax returns.   TT even imports for Quicken ;>))

Cheers,

Buddy

Sorry to give wrong impression.  My tax was filed in February.  I have just found Bigger Pockets and planning for  year end planning and next year filing.

I do appreciate the comments, but I'm not asking this on April 1st for this years tax.

Call me what you may, I like doing my Taxes on Turbo Tax (TT) so that I can do tax planning and what if's.  OK I am a retired engineer but my slide rule has been packed away.

I would very much like to find an experienced REI CPA who can use Turbo Tax(TT) as well as their professional software. Ideally I would happily pay for tax planning and filing reviews if I could just pass them my TT file back and forth.

I think I have correctly gone through a 1031 exchange in 2016. I spent an hour with a CPA who was able to give me good advise but unable to comment on correctness with out spending many hours feeding my data into their own software.

In 2017 I plan a 1031 exchange into DST's which I anticipate several Schedule E's and supplied Cost Segregation Analysis information with multiple depreciation schedules starting each tax year.

Anyone with experience with these issues?

Hello @Kyle Frey.

I didn't see an answer for your question.

I am not a professional Tax expert but I think the answer is two fold.

You can document 750 hrs in the real estate actitivity, or

You can claim more than 50% time spent in Real estate.

With a full time job this is hard to do unless you are a RE agent.

I am retired, so easier to do.

Cheers,

Buddy