All Forum Posts by: Jack B.

Bump

1) Eviction moratoriums, even people who are still working and unaffected by COVID are not required to pay rent due to our idiot Governor. So skyrocketing rents don't help when they don't pay. 

2) Our legislature is trying to make evictions illegal....they are looking for a way to exit the moratorium without anyone being responsible for back rent or losing "their" free home paid for by the new breed of government freebie: forced free housing at the landlords expense. They want to make evictions a crime now...absolute idiocy.

3) I don't make my money off rents, most of my properties appreciate 50-100K a year each depending on the year. This is not a cash flow market, you know that, although I do cash flow well, that's peanuts compared to the appreciation that I keep 1031 exchanging into more rentals. I just went under contract for two new ones in fact, one of which is another lake front property but in Florida this time... :-)

 With the growing cancel entitlement, and the demand to "cancel rent" I'd be worried. I really think these people have the IQ of a wild animal, to think landlords are going to buy 500K+ houses and pay the expenses for them so they can live for free. Complete and utter idiocy...

More than 40% of landlords in Seattle in 2018 sold or were selling their rentals when UW did a study, as a result of more socialist policies that stripped landlords of the right to screen, raise rent or evict bad tenants. I'm sure it's even worse now with moratoriums. I am selling my properties and moving the money to Florida. Guess that happens as more and more landlords escape this ridiculous socialist ideology: there will be less supply, demand will increase or stay the same and rental prices will skyrocket, having the exact opposite effect of these politicians best wishes...creating more homelessness. 

Do you own this forum? You an just hit the back button, the rest of us successful people really want to see how we can protect ourselves from entitlement mentality. 

What you're asking is basically the equivalent of cancelling a landlord because you don't like the rental or the landlord. SO leave and go rent somewhere else...

Same concept applies here, if you don't like it, nobody is forcing you to read it....

Lived in it from2013 to 2015, then rented it out until 2018 at which point I moved back in for 2 years. Total time rented, about 4 years, total time lived in, about 4 years.

Bought 145K plus 5K closing costs, sold 416K.

Put new roof and water heater on for 14K to adjust my basis

25K selling costs.

10K depreciation.

By my calculations I have 217K that I divide by .5 to get 108.5 that I owe capital gains and depreciation recapture on, correct?

(145+5-10+14=154K) then (416-25-154 = 217) then 217/2 = 108.5

I make 308K a year W2 income. I'm expecting to pay 23% capital gains with the Obama care surcharge. Worth it or not? After 10 years of being a landlord of multiple properties, I've considered getting rid of them starting with this one rather than 1031 exchanging anymore. The have nots want what we worked for, cancel rent, live for free, but landlord you must pay and fix things in this 800K house you provide me for free....

I've had the property for 8 years. Did a cash out refinance on it recently along with others. The house got a new roof a year ago because it was ready to fail. Plumbing and appliances as well as paint will need upgrading soon too.

It will cost me 20K in transaction costs to sell it and 5K to purchase another. I'd be doing a 1031 exchange. 

I'd spend at least that to replace the furnace, galvanized plumbing, carpet, paint, etc. in the near future IF I don't sell. The neighborhood is also declining and between cap ex and the decline I'm considering getting out of this house to reinvest in a better area. It has basically hit a plateau appreciation wise for the last 4 or so years. 

Sell and reinvest or keep it a while longer? 

 That's not what I said, you misread or misunderstood the scenario. I didn't say a 50K a year job. I said let's say that's your living expense, covered by rental income. I said your income is X a year....

Nor did I say that's all you save.....

Again, you misread and misunderstood all of what I posted.

Rented to a tenant who wanted to move in right away. I still did a background and credit check, but I did not check references. They moved in that night. Next day I find out WHY they were so eager to move in that night. After I got them out 6 weeks later, it was even more obvious what their scam was. BUT....I scammed them not the other way around. I got to legally keep their money. My lease structure and the state law on property abandonment and rent being mine when they abandon was key. Month to month leases only!

Another time I had a tenant move out in the middle of winter. It dropped to 9 degrees Fahrenheit. The galvanized pipes stopped working. 4.5K for replumbing the house (1 bathroom, kitchen, water heater and washer) plus 1K for drywall and paint...and I had just painted....

Hiring contractors....without a contract that stipulates the terms of the deal.

Luckily most of the mistakes I read today were 5-10K mistakes, that's easy to swallow but not ideal. At least it's easy to swallow once you've been in this a while and realize how much money you can make/make.

Well, not entirely, but you can shield more of it.

I'm going to use a very round and specific example to demonstrate this concept. Check my understanding of the tax law on this.

Let's say you make x a year. You want to sell your rentals, and you will get some money in capital gains. You will owe money on that gain, 15% capital gains based on the tax bracket you're in from W2 inome. Talking LONG TERM capital gains tax rate, which as I understand it, does not affect your tax rate as it does not get added to your ordinary tax rate from say, W2 income etc.

So why not take a year off, literally from January 1st to December 31st, live off your rental income/savings, basically let's say 50K that you would otherwise save, take a year long sabbatical/vacation of a lifetime doing nothing or road tripping, and show low enough income on your taxes the next year that you owe ZERO capital gains taxes. Yes, you spent 50K of rental income and savings mixed so that you could maintain your lifestyle but still show low taxable income (tax advantaged rental income). But you saved money on capital gains taxes, so you still come out with a largely free vacation. You spent what you saved in say, capital gains, on vacation.

The beauty of this is that not only do you come out WAY ahead tax wise despite living with no W2 income for a year, you got a vacation, loooong one, and because rental income is tax advantaged, if your properties show as a loss despite being cash flow positive and you have enough of them, you could basically live off the rental income alone and pay ZERO taxes, and NOT have to dip into savings for that 50K living expense that year. You need enough properties to do this but it's doable.

Thoughts?

Keep in mind that once you move into a tax bracket of 15 or 20% tax bracket upon a sale of too many properties in one yes, you still owe capital gains on the portion above the tax bracket that owes 15%+ capital gains. But you do reduce your overall tax by nearly 6K. The end result. You either take a year off free with zero capital gains tax, because you spent that money living instead. So financially you are the same as you were before the sale, but you got a year off instead of paying it in taxes. 

Well, not entirely, but you can shield more of it.

I'm going to use a very round and specific example to demonstrate this concept. Check my understanding of the tax law on this.

Let's say you make X a year. You want to sell your rentals, and you will get some money in capital gains. You will owe money on that gain, 15% capital gains based on the tax bracket you're in from W2 inome. Talking LONG TERM capital gains tax rate, which as I understand it, does not affect your tax rate as it does not get added to your ordinary tax rate from say, W2 income etc.

So why not take a year off, literally from January 1st to December 31st, live off your rental income/savings, basically let's say 50K that you would otherwise save, take a year long sabbatical/vacation of a lifetime doing nothing or road tripping, and show low enough income on your taxes the next year that you owe ZERO capital gains taxes. Yes, you spent 50K of rental income and savings mixed so that you could maintain your lifestyle but still show low taxable income (tax advantaged rental income). But you saved money on capital gains taxes, so you still come out with a largely free vacation. You spent what you saved in say, capital gains, on vacation.

The beauty of this is that not only do you come out WAY ahead tax wise despite living with no W2 income for a year, you got a vacation, loooong one, and because rental income is tax advantaged, if your properties show as a loss despite being cash flow positive and you have enough of them, you could basically live off the rental income alone and pay ZERO taxes, and NOT have to dip into savings for that 50K living expense that year. You need enough properties to do this but it's doable.

Thoughts?

Keep in mind that once you move into a tax bracket of 15 or 20% tax bracket upon a sale of too many properties in one yes, you still owe capital gains on the portion above the tax bracket that owes 15%+ capital gains. But you do reduce your overall tax by nearly 6K. The end result. You either take a year off free with zero capital gains tax, because you spent that money living instead. So financially you are the same as you were before the sale, but you got a year off instead of paying it in taxes.