All Forum Posts by: Jonathan Pavkov

@Jonathan Pavkov

At the moment I need tax prep, so #2. But maybe more tax planning in the near future, #3!

Complete newbie here.. I have a good understanding of how a HELOC and HEL works, however, I have no clue what are the steps to take once the funds are secured. With a conventional loan the lender takes charge of doing all the services such as title search, title endorsements, etc. How is it handled when to the seller its basically a cash deal?

 That is like saying you have driven drunk before and didn't get caught, so that means it is legal. You can literally do whatever you want on your taxes. You can claim thousands in expenses with no receipts to substantiate. Nothing will happen unless you get audited. 

Not everyone who does questionable things gets audited. Most tax professionals want to see 1 year (and one day) to hit the two year standard. Showing rental income also shows it was used in trade or business, so these two things combined are solid proof to avoid questions. The general consensus is that the less time you held the property, the harder it will be to defend. 

Tax code is vague and therefore there are many tax court cases with mixed results. It is hardly clear cut that intent and unsolicited offer substantiates short holding period. Show me a court case that determined that alone is sufficient.

 It doesn't change my answer, because you are not satisfying the requirements of it being "held for investment" which the IRS has said short term is not sufficient. Less than a year is short term by all standard. The IRS has stated that a time period of "two years is sufficient". You also received no investment income, so your entire financial gain from this sale is due to value add (flipping). The rules say it doesn't "apply to any real property held primarily for sale". If you had no rental income, what other purpose is there than sale? Intent doesn't matter. The word intent isn't in 26 US Code 1031. 

I don't know if you will get audited, but if you do, this is very questionable at best. The burden of proof is on you and "my CPA told me it was ok" is not a defense. I am not trying to argue with you. I am genuinely trying to give you safe guidance here. It would have been better if the property was rented before being sold, because that would have show actual investment use, even if the time period was shorter.

Hello all! We are relatively new at real estate investing, and are looking for ways to still secure properties in 2021 and benefit from a tax standpoint. We do not currently have REPS, therefore had heard a good way to still claim bonus depreciation on a property (and thus help with taxes) is through a short term rental with 100 hrs of material participation and more than anyone else. We heard from a CPA that this rule only applies to those with income less than $250,000/year, and since my W-2 income is above this, we could not capitalize on an STR in this manner. This was the first we had heard of this income cap for claiming bonus depreciation on an STR, so were wondering if anyone else has heard of this? Any high income earners >$250,000 currently capitalizing on STR's in this manner? Any advice and specific articles or resources would be appreciated. Our extensive google has turned up nothing…. :) Thanks so much!

Like Jack, I visited Columbus recently.  There is much to like, in my view.  Victorian Village, Worthington, Short North were especially impressive areas.  Overall, I got the feeling I was in Texas/New South with much of the landscape seeming like it had been built yesterday or the day before.  On the investment side, I got the same impression, though, that house prices have already outrun rents and I do not see rents increasing by a sufficient amount to make up the difference barring a pretty dramatic fall in the house prices.  Those who got in earlier have made out like bandits and I applaud them for their foresight and pluck.  At this point in time, I can't justify investing there when I can deploy slightly larger amounts of capital at a comparable price to rent ratio in parts of the SF Bay Area.  (And no, short of nuclear holocaust, Columbus will never eclipse Chicago).      

The broker and loan officer I was working with for months informed me that there was a recent rule passed in Ohio that loans under 130k aren't being issued or very hard to get. This has discouraged me from looking in the Cleveland area. I have not found any news or articles verifying this but would like some more information about if it's true or not.