All Forum Posts by: Cameron Skinner

@Alex M. I strongly sugest you meet with your CPA ahead of time to set up all your accounts and reports correctly so that tax time will be much easier and your reports will be giving you the most useful correct in formation.  You can't improve what you don't measure so it's important that your measuring your financial health properly, good luck!

as long as the ownership interest is the same before and after the transfer it is not a taxable event in other words you own 50% and your spouse owns 50% the LLC will need to be owned 50% by you and 50% your spouse. The two year rule is for if you transfer to a related party you have to hold it for at least 2 years. For example my dad 1031s a property to me, then I have to hold it 2 years or it would trigger capital gains for him. Hope this helps good luck!

I would just match the federal return, and not worry about amending for a $37 error.  It is obviously a typo and honestly in the rare event of an audit the Irs agent would not even take the time to write it up and make the adjustments for $37 error.  Good Luck!

The "dealer" vs. "investor" rules are not only extremely complex but actually vague and subject to interpretation.  A simple fix is to rent the property for a year then sell it.  Then there would be no question that it was an investment property and you would not only avoid self employment tax but also only pay long term capital gains. Lastly hire a tax professional that specializes in real estate and preferably owns some himself, so he can help you plan your strategies ahead of time, for the best tax benefit. Hope this helps, Good luck!

Sounds like your using online version.  If you just buy desktop version "pro" you can have as many entities as you want.  quick books pro is expensive but once you buy it's good for several years as long as you don't have payroll, then you have to upgrade every 2 years.  I have a business partner still using 2000 and it does everything a real estate investor needs just icons aren't as pretty as newer version.  Plus desktop version is much faster and easier to cut checks,  and has better reports and more options to customize reports.  Hope this helps, good luck!

@Cole Schlack LLC are not corporations and were designed by state legislatures to encourage business men to take risks opening new businesses and buying property without putting their personal assets at risk. So there are no rules to keep minutes of meetings elect officers, corporates books and records yada yada, in Florida anyway as long as it's a bonafide business venture your OK. Only one LLC has ever been cracked in FL, the Federal trade commission vs. Olmsted, and he just transferred all his personal assets to an LLC to avoid a judgement, and was paying his personal bills out the LLC. Even though this was blatantly an "alter ego" to avoid creditors it still took the full legal force of the Federal government to crack into the LLC. Again just my opinion and I know my approach is not for everybody. Oh and don't get me wrong I carry fire wind and flood on everything, I just chose to use asset protection strategies instead of liability insurance, to avoid law suits.

If you have mortgage on the properties the umbrella might be overkill the LLC will protect you if someone is hurt on your rental from going after your personal assets and you have to have a huge amount of equity in the rentals to make it worth an attourney to go after your properties because even if he gets a judgement he still has to foreclose on the individual properties and pay off the first mortgage, the cost of foreclosure would eat most if not all the equity and while in foreclosure it's not like you would continue to pay the mortgage or property tax ect reducing equity even more.

So I'm at church several years ago and a fellow member who is a personal injury attourney and I were talking about the bad economy, I say well it shouldn't effect you. He says it does because people are hurting so bad they let their liability insurance lapse because they can't afford it. So I read a few books on asset protection and big insurance policy can actually increase your chance of being suied because 2 million will have every slip and fall attourney in five counties salivating. I actually went as far as to cancel all my liability insurance. Two years ago one tenants dog bites another. We did not allow pets and had no idea he even had a dog, and of course said he was just dog sitting for a friend. A simi famous ambulance chaser files suit againts my LLC, remember he can't go after me personally because the property is in an LLC. I answered the complaint myself. Attourney sends "interrogator" basically questions several about any insurance policy's and financial assets of the LLC. Once he found out I had no liability insuance, my home owners did not cover dog bites, and I had a big mortgage on the property he dropped the case.

I'm not saying this approach is for everybody as liability insurance will cover legal cost and you need to be at least a little legal savy to answer all the legal filings, I'm just saying be careful as not to make yourself a bigger target. Don't forget if I had a 2 million dollar liability policy and God forbid that dog severely hurt or killed that girl they would sue for 10 million insurance would pay for 2 million and the LLC would still have a judgment on the LLC for the rest. With no insurance case would just be dropped, as it would cost more to go after my equity than the legal fees because remember attourney only gets 1/3 even if I have 30k in equity in the property, his cost going after the LLC will be much greater then 10k. Good luck!

Thanks @Jimmy Humphrey for starting this discussion.  I think when when your young and you get started you really have little to lose,  so you can be more aggressive,  but as you build a portfolio you should not gamble everything on the next deal.  I lived through the financial crash, and I was extremely conservative and it still nearly bankrupt me.  I watched as several of my friends and colleges who were "over leveraged" get crushed and many are still dealing with the fall out.  

@Steve Vaughan is wise to bring up the tax consequences of selling,  you would end up giving half your gain to IRS if you sell.  This was a hard thing for me to learn since I build houses, I build at wholesale and I can make  money selling the homes I build at retail but if I keep them I still made the money. Because my net worth is higher I just keep my money in the equity in the home not my bank account so I don't have to pay tax on it. So in other words you get to eat your cake and keep it too because you did make 400k you just have it in real estate not in cash and you can still get your 2,500 a month.  Lastly, just my own experience, but during the housing bubble I made a tone of money building and selling speculative homes for some reason all that money seemed to evaporate but the homes I kept as rentals are still there spinning off cash every single month. I bet if you take the cash now in 5 years you will have little idea of where it all went. But if you keep her, you'll look up and know exactly where your 400k is and a little more as you pay down the loan and more than likely she will have appreciated in value.  Good luck!

@Steven Hamilton II I disagree they can charge it to their customers because they have a contractual relationship with them but they can't charge it to a third party.  For example if you file 1099s for a client you can charge your client but you can't charge the person receiving the 1099 even if the client has something in the contract about charging for them the client could collect a fee from his sub contractor but you could not legally collect the fee because their contract is with the subcontractor not you.  In this case @Arthur E. has no contractual relationship with the management company so they can't charge him a fee.  I actually know a lot about this subject because I was involved in a lawsuit involving a similar issue.  But that said every state is different, even if it's legal in Arthur's state still doesn't seem fair and a demand letter is only cost a postage stamp.