All Forum Posts by: Joshua Thompson

Michael Plaks hit the nail on the head with his response. As long as you own the property there shouldn't be any impact tax-wise.

If you need further guidance after reading the post I would recommend doing a short consult with a real estate "savvy" accountant. This would be better than learning a large purchase may not help you tax-wise come filing time.
 

Hi Will!

Thanks for reaching out on the forums. I would recommend the following:

1. Use the BP tool above "Build Your Team" and select an accountant specializing in your investing area. Most are active in the forums if they are accepting new clients but not alwayss.

2. Recommendations are always great if you know a fellow investor ask who they use.

3. Reach out to 5 professionals you see in the forum and they seem like they would be a good fit to work with.

Before reaching out to a professional I would recommend to determine what an ideal accountant relationship looks like to you. Do you want to work with that individual or someone from their team, is communication big, do you want just tax prep, do you want on going services, do you guys get along well together, how much do you want to invest working with someone, do they invest in real estate as well etc.

Good luck!

It is difficult to answer this without running numbers, I would highly recommend speaking with TrueBooks if you're set on them to advise on this. Typically if the numbers work then yes but you'll want to ask yourself a few additional items:

1. Would it be better to take a 401k loan that you could pay back over time?

2. What tax bracket are you currently in and what bracket do you expect to be in this year with/without the 401k distributions and what bracket to you expect to be in next year.

3. Do you have cash available if you need to do immediate capital improvements

4. What is your current interest rate on those various lines of credit? Would it be more or less than a 401k (if a loan is possible)?

5. Is a self directed IRA an option since it sounds like you have a large amount of funds in a 401k

6. Are you or a spouse a real estate professional, could you offset the 401k distribution tax with a cost segregation

7. Since you're retired I'm assuming you're over 59 1/2 but if you're not maybe you look into doing a 72t withdrawal.

8. Find a partner to bring the cash and you self manage?

There is a lot here and these are just a few items that quickly came to mind. That consult with TrueBooks or a real estate savy accountant would probably help put some estimates/numbers on paper

 Of course! Thank you for posting to the community!

No problem! Good luck!

Hi Ron, 

In most cases, it will need to be capitalize and depreciated over 15 years (some will say 27.5). I believe there is an exception if it's a municipal sewer but would need to look more into this as it's usually a special situation. Typically a credit card balance does not need to be paid off to include the expense on the current year return. Typically 15 year property can qualify for bonus depreciation.

I use the word typically and usually a lot because I highly recommend you speak with your accountant to get specific information about your situation. The answers could change with additional information and I do not recommend you use the above without consulting your a tax professional first.

Here is the post https://www.biggerpockets.com/forums/51/topics/1204912-how-t...

I believe someone just posted a great discussion regarding finding land values in this section a few days ago. I would highly recommend giving that post a read!

For our clients, we typically look at the most recent appraisal, county records, or property tax statements from the year of purchase. We don't do an 80/20 or 70/30 rule as it doesn't give you any ground to stand on if ever audited. 

If you don't have an appraisal and cannot rely on the county website then speaking with an appraiser sounds like your best option to get an accurate valuation. Be sure to ask them how close their appraisal values typically compare to the county records before starting this will give you an idea if in fact the county records are far off. Take the answer with a grain of salt because values can vary drastically.   

Hi Zack,

A big item to think about here is your intentions for the property. Will this be a rental or something you'll be living in? I'm assuming it would be a rental but assumptions cause errors so I won't get too much into it. I would determine your intentions for the property, if lenders will lend directly to your LLC, your purpose for doing this as a business, and if you plan to build homes again. Once you can answer these questions I highly recommend reaching out to an accountant willing to consult you to address these items and dive deeper into your tax situation.

I hate to give a broad answer but it's difficult to answer this without additional information and directly in the forum. This is a great one-on-one question with an accountant.

Hey Donald, I would say connecting with an active accountant here in the forums would be a great start. You can also use the "Build Your Team" feature to search for accountants on the platform that advertise through BP. This sounds like a fairly simple straightforward situation that just about any real estate savvy tax professional could assist you with but don't get me wrong I've seen plenty of professionals mess something like this up.