All Forum Posts by: Account Closed

I bought a condo "subject to existing financing"  I gave $4000 to the seller and started making payments on the existing mortage, total payment amount of $232/month.  I sold this 9 years later for $225000.   The people probably would have sold it to me for $2000.  I just never asked. 

Daniel-

Understand some of these 80+ "doors" are not bought by one investor.  They are bought through syndications or partnerships.

People sometimes want to act like they own the whole thing.

Tony Kim-

It's not bizarre.  I choose not to involve myself each year in practicing real estate for 750 hours.  This is a decision I make

about my life.  I choose to be an investor.  I am not a victim.

Thanks.

Eamon- McElroy

not sure if you're using different (and uncommon) terminology, but:

• One doesn't simply choose to be an "investor" in real estate vs in the "trade or business" of real estate. It's based on the facts and circumstances.

I actually do choose to be an investor.  I choose not to work as an employed real estate person.

• Being in the trade or business of rental real estate generally does not subject the rental taxable income to SE taxes..

There are different types of rental income.  Check your sources.

• . Rental real estate is not subject to SE taxes unless (1) the taxpayer is a dealer and the property is used in the taxpayer's ordinary trade or business as a dealer, (2) the taxpayer is renting out farmland under very specific fact patterns, (3) hotel-like services are provided with the rental, or (3) the taxpayer is renting space in parking lots, warehouses, or storage units. This is pretty clear under IRC Sec 1402 and the related regs…

I recommended Lasser's Tax Guide.  I was not trying to dissect a frog.  People could wind up being a dealer and not even be aware of it.

• The SCOTUS Groetzinger case has made clear that there is no set amount of hours to reach trade or business status (there is no "so many hours per week").  Yeah.  Review your answer to question 1 above.

Yeah.  I know.  I figured Lasser's would help in that area. 

• The SS portion of SE taxes is 12.4% and the medicare portion of SE taxes is 2.9% for a total of 15.3%

I know.  I know.  But I think you MISSED THE POINT!!!! 

I choose to be an investor.  I do not have to pay social security on my proceeds.  I write off my rental costs such as taxes, maintenance, and other expenses against rental income.  Also depreciation goes against income.  No need to pay social security on real estate income if you are an investor.  If you are claiming a "business" of real estate this implies you "work" in it so many hours per week.  You can still write off expenses against rent but you need to pay social security tax on real estate "income."  Also regular income tax on that income.  The social security tax right off the top is something like 15.63 percent.  This means for every $1000 of income you pay $1000 x .1563=$1563 in social security tax and THEN you have to pay regular income tax.  Now if you don't outright "sell" your property, but instead do 1031 exchanges this is all deferred on real estate property sales.  However "income" in real estate could come from rents, from property management, from air bnb, and so forth. 

I suggest you purchase Lassers Tax Guide and read the part that pertains to this.  They have a new version every tax year. Best $40 I ever spent.  

Daniel-we don't know if you want this for a long-term investment or a flip or whatever.  My goal is to put down as little as possible.  I buy small properties with little risk.  Everyone is different.  You don't need a massive network of anyone to start out.  You are being intimidated by people and while investing is a big deal, you cannot expect yourself to know everyone just starting out.  Personally these days I try to get a "fair" deal  Why?  Because even if I over pay, inflation takes care of overpaying to a degree.  Have fun.  A lot of people here take themselves too seriously sometimes.

Abigail;  I looked at your pic.  Wow.  Your bf should be moving to you!  It sounds like you will make lemonade wherever you go and you are young so do what works and however it turns out, just learn from it.  None of us are "you"!  We can't decide what is best for you.

The tax rules are different depending on whether you call yourself a real estate investor or if you claim real estate is a "business".  I prefer the rules being an investor.  But you have to decide what is best and works for you.  I'm a CA. licensed tax preparer.

This one needs a plane flight out there.

He sounds believable, but a simple round trip

might end up saving you a ton of heartache. 

Some lenders will;  some won't.  Start dialing for either lenders or seasoned mortgage brokers.