All Forum Posts by: Jesse Fernandez

I am looking to take advantage of cost seg for a  2 unit MF property - which has tenants for long term rental  (let's call this property A)

I know that in order to take advantage of cost segregation, there are no specific "status qualifications" per se, but certain conditions and considerations should be met such as 1) having a real estate prof status (i.e., spending more than 50% of working time & 750hrs pr yr in RE business) or 2) short-term rental status, rentals with a duration of less than 30 dys)

I do not qualify with a RE prof status, but I will be acquiring another property with the purpose of having it for short term rentals (property B), please note that this property is outside of the U.S., so my question is: 

I don't qualify as a RE professional status, but can I use the acquisition of the short term/property B as my "short term rental tax loophole" for the purpose of the cost seg on property A? Or does it only apply to the short term rental property only? 

Thank!

Hi all, I'm alil confused on how cost seg works. Specifically, are there limits to how much I can take on accelerated depreciation if i am not a real estate professional? Is the accelerated depreciation only applicable to schedule e? Meaning, it cannot be carried over to offset any income I've made outside of real estate in my main profession? 

Say hypothetically speaking, if I am allotted $150k of cost seg with bonus depreciation in year 1, would I be able to use it all in the first year? If so, if there a top limit to how much I can use from that number? If no, does it carry over to future years until it is used up? 

Basically want to know want I can use in a cost seg if i have a job outside of RE and I am not consider a RE professional? 

Any feedback would be appreciated!  

@Dave Foster thanks! 

thanks, @Bill B. and @Dave Foster

I would qualify as #2, where I basically lived in the property for 2 out of the last 5 years and now have it as an investment property.

My question boils down to this (and I think Bill touched on it), I can take the 121 to avoid cap gains tax up to 250k, but for the portion where I have to recapture depreciation, can i use the 1031 to not pay that remaining amount? 

Is it worth it after factoring in 1031 costs, etc? I purchased it for 280k, assuming the #s Bill ran, that's about 1400/yr x 3 years where it was an investment property equates to ~$4200 in total recap depreciation...do I have my numbers right? And is there a way to offset/defer me paying recap if I plan to use 121?

@Dave Foster wanted to bump this back up. I am in a similar situation, where I've lived in my property for the first 2 of the 5 years, so I qualify for the 121, but would have to recapture depreciation. 

Would using the 1031 to offset the recapture depreciation be a feasible option, considering fees/cost?

 My capital gains would be at ~250k (top of the limit for a single person/me)

@Anthony Dooley equity as collateral is where I eventually want to be, and something way more comforting. 100% agree. 

@Robert C. funny because when one thinks of stress testing a MF investment, its usually on the operations side of it, i.e., occupancy/vacancy hypotheticals. Your stress test on rates after reno is certainly  a longer term hold, which is great. 

Thanks for illustrating the vision of stabilizabtion, helps me bucket steps along the way against the refi period. 

One quick question, what do you mean when you let your loan float? Meaning ballon at the end? 

@Devonte Dinkins wanted to check in and see where you are with this, have you made some strides, some insightful takeaways from the process, etc? 

I'm trading up to 5+ and would love to get your perspective. 

@Mike Dymski thanks, what exactly is a supplemental loan feature in layman terms? Is it essentially just the prevention of being penalized if I were to refi from that originating loan? Or is there more to it?  

@John Warren thanks for the info! 

@Rob Massopust I was under the assumption that a refi would be easier? contingent obviously on increase value and NOI

@John Warren Great info! 

I guess to your point, if I underwrite a deal to cashflow at a loan rate as low as X, I also need to determine that it continues to cashflow at a rate as high as Y. I just need to run my #s to determine what Y equates to, and what that ceiling is.

What concerns me is, since commercial loans tend to have a much shorter maturity period than a residential loan, this shorter maturity requires a balloon payment at the end of the term, so right before the loan fully matures, I'm forced to either 1) sell or 2) refinance, assuming I want to avoid the balloon payment. If rates jump, by then, then how does one approach this?