All Forum Posts by: Joe Splitrock

 Thanks Jay! I wanted a Cybertruck, but with the number of pre orders, it could take years to get one. We preordered a Kia EV6, which is meant to compete with the Model Y. We went that route for several reasons. They still have the tax credit, have a 10 year warranty on the battery/motors, have a local dealership for service and we have a Kia Telluride that we are very happy with. No super charger network is a downside, but electric charging networks will grow quickly in the next couple years. There is enough range that we will rarely use a charging network. Your comments over the years have definitely helped sell me on electric cars. 

Unfortunately we don't have time based electrical rates, so it is the same at day or night. They are looking to roll it out in the next year, so I will definitely take advantage of lower night rates.

I think it is insane that Biden hasn't worked with congress to extend new credits for Tesla. He seems to hate Tesla, which is BS considering Tesla has lead the world in EV innovation and employs tons of American workers. I read an article that Biden said the word Tesla for the first time since taking office just yesterday! Build back better plans have tax credits, although the Tesla ones are lower than for GM or Ford. They also have money for electric charging networks. All good if congress can work together and pass something.

Do you actually purchase/lease/finance your vehicles through your business? How do you handle the personal use percentage or do you just use it enough for business that you don't worry about it?

 Sometimes it takes a disaster to get smart. After three fires in 1.5 years, our fire safety protocol vastly changed. 

1. We always add egress window to bedrooms that don't have one. You can just assume someone will sleep in it, so no reason to risk it.

2. We install a fire extinguisher in the kitchen. This kept fire number 3 from being more than smoke damage. The tenant was able to put the fire out quickly.

3. We install smoke detectors in bedrooms and hallway. We ensure they are less than 10 years old, because they expire. We have moved to 10 year battery models, so tenants can't forget to change the batteries. I can't count the number of times that every smoke detector had bad batteries when a tenant moved out. So scary, having known someone who died in a fire because there was no smoke detector.

4. We have strict rules in our lease including, no smoking, no candles, no grease fryers and no open grease frying on the stove top. We educate tenants on the dangers and explain why we have the policies.

5. Check insurance coverage values to make sure they keep up with market value. Underinsurance is a major problem is a quickly appreciating market. Also be aware that many insurance policies do not protect against "loss of rent" but you can add this coverage.

That fire of my landlord friends was a tenant who went outside on the deck to have a cigarette at 1AM. He thought he put it out, but apparently it ignited something on the deck. By 2AM, the entire back of the property was engulfed with flames. Every single room had smoke damage and half the property needed to be rebuilt. It is around $200K worth of damage. In my case with a kitchen fire, the water, axe and smoke damage in the property was worse than the fire. The fire department dumps insane amounts of water and chops all the walls open.

Take my advice and save yourself some expensive lessons. Good luck and congratulations on your new real estate business!

We are in a situation where my wife is soon to be quitting her job to focus more on the rental business. My daughter will be getting her drivers license this year, so we will need to add a third car. We could probably get by with two cars, accept the rental properties mean we need a third car for situations where I am at work, my daughter is at school and something needs to be done at a rental property. We have been claiming mileage and put on about 2500 miles last year for rentals. We are looking to buy a new car that will be under 6000 pounds. We want to expense the new car against the rental business, but I have some questions and looking for advice. I understand I need to discuss with my CPA. I am just trying to get educated and multiple opinions:

1. New vehicle will be $60,000 but with $7500 federal tax credit for electric. What is the best method to depreciate and how does that work per year? Any bonus depreciation or good strategies here?

2. We will use the car for 60-75% business and the rest personal. Is it correct that I just prorate based on percentage use? Is that done with all expenses at the same ratio? How about if your split between business and personal changes every year, can you adjust each year or are you stuck into a set percentage?

3. If I finance versus pay cash, can I claim interest expense? 

4. Can I claim sales tax in the year I purchase? 

5. It is electric, so no gas bill to claim. I can claim expenses on billable chargers pretty easily, but how do I claim home electric use? Do I just calculate split based on KW charging hours and keep some records of my bills to substantiate?

6. Can I expense license plate/registration and insurance? 

7. Should the vehicle registration be in the business name or personal or does it not matter for tax purposes?

8. We drive 2500 per year for the business, so is that substantial enough to justify a car? Do I need to keep any type of mileage records similar to what I am keeping right now when claiming mileage deduction?

9. If we chose to continue claiming just mileage, are there other expenses I can still claim? Vehicle registration, insurance, sales tax, etc OR does mileage mean ALL expenses are part of that?

@Natalie Kolodij @Michael Plaks @Ashish Acharya  and any other BP tax experts, please share your advice.

 There is no insurance company that offers this type of product. There was a guy on a podcast that referred to insurance, but the website actually called it assurance. It is more like a deed warranty. The website looked very sketchy, so I am not even going to promote it here. Honestly, most people doing subject too have no insurance/assurance type guarantee. Generally speaking if you are paying the loan on time, there will be no issue. Worst case, you just need to find someone to finance the deal if the loan is called. 

@Ellie Narie I am not sure where you got the "6 month and 1 day" from. FHA requires 1 year of occupancy. You could travel for a job during that time, but you need to actually be occupying the property. If you are traveling for your job, you are not paying housing expense someplace else. Employers or businesses that require travel will be paying your housing, so in that case it is easy to determine if your housing situation is required or voluntary.

Occupancy is your drivers license address, your tax address, your employers address for you, where you get mail, where all property bills are sent, where your vehicles are registered, where you sleep when not traveling for work or vacation, where your bed is and where your clothes are. This is pretty clear to most people who have lived somewhere, so not sure why you are unclear? Maybe explain your situation a little better and we can help?

Refinancing using conventional mortgage for cash out requires 6 months. Why would you refinance into an investment loan if you are occupying the property? Your wording seems to imply you want to do something not above board.

4155.1 4.B.2.b FHA Requirement for Establishing Owner Occupancy

At least one borrower must occupy the property and sign the security
instrument and the mortgage note in order for the property to be considered
owner-occupied.
FHA security instruments require a borrower to establish bona fide occupancy
in a home as the borrower’s principal residence within 60 days of signing the
security instrument, with continued occupancy for at least one year.

 Your lease should come from an attorney or buy an attorney vetted lease. So you should not be editing leases unless you run the changes by an attorney. Another approach I have seen is having the lease reference "rules and regulations", then have a separate document that has property rules. That way you can update the rules without needing to update a lease.