All Forum Posts by: Cameron Skinner

Wait! You mentioned you would be getting a loan you will have to pay Unrelated business income tax UBIT which is brutal. Also if your using leverage with depreciation you might have better tax benefit keeping it out of self-directed, Don't get me wrong self directed ira or 401s are great for real-estate but only when you don't have a loan.

I'm a gc in Florida not sure about your state but in Most states have really good regulations governing contractors, but you have to follow the letter of the law exactly for example you may have to send him a certified letter and so many days to correct. No contractor wants to risk his license over one job. I suggest you contact your states licensing board and find out exactly how to handle.

@GERT S.  as long as you and your wife file a joint return you can still treat as a disregarded entity for IRS purposes.  

But also don't get too tied up about single-member versus multimember. Yes multimember adds more protection but you still have a lot of protection with the sole member LLC. The protection that was lost in the Olmstead case was the guy had a personal judgment and before the judgment was filed he moved all his personal assets basically to LLC to avoid creditors. As long as you're treating it as a real business, it would be hard for a lawsuit to crack the LLC. Plus the attorney fees would be enormous for someone to even try. The Federal Trade Commission was after Olmsted took it all the way to the fl Supreme Court to crack his LLC. Send me an email and I'll send you a copy of my operating agreement will be next week because I'm on spring break krazyrent @gmail.com

@Account Closed  when Olmsted came out I spoke with my attorney about the issue.  We added my wife as 5% owner  "member" to all my LLCs with just an amendment to my operational agreement.  But make sure you have an operating agreement or organizational documents because with a multimember you do need it to make it a legal entity.  You can even make her a managing member if you wish and send in an amendment to the state or just wait until you renew and just add her.  This won't affect property taxes etc.

That's not true single-member LLCs do give you an added level of protection over just owning a property in your own name. There was a recent court case called Olmsted where a single member LLC was broken by the court because he was not treating it like a business. Because the court said it was just an alter ego of the owner. If you read the case he was running his own personal expenses through the so-called LLC. After that the Florida legislature firmed up the statute that says multi members charging lien is only recourse againts multimember worried that court decision might have business flee the state. So multi member is better. In Florida you don't have to disclose the members to the Florida Department of corporations only the manager or managing member. I'm actually manager of a few LLCs which I have no ownership interest in. And I'm the only one reported on the Department of corporations website. You can just add her as a member to Organizational Agreement. What you filed online was the articles of organization. But you still need an organizational agreement which there are several examples online and is private and not reported to anyone. As long as it's just you and your wife and you file a joint return you can still treat as a disregarded entity for federal tax purposes

Ken Taté in the event of an IRS audit it's up to you to prove your expenses. Of course travel expenses to vacation destinations are always highly scrutinized. Make sure you always keep a log of what you did as rental real estate activites meetings with professionals and any documentation of those meetings. But just because their scrutinized doesnt mean you shouldn't take a legitimate expense. Even IRS sponsors continuing education for accountants at vacation destinations. Accountants will go sit in classes for several days then tack on a vacation at the end

@Brandon Turner recently touched on the deduct-ability of travel when visiting your out of town properties on the podcast, so I thought I would chime in.  You may ­deduct 100% of your transportation expenses only if you spend more than 50% of your time on rental activities while at your destination. In other words, your rental ­activity days must outnumber your personal days. If you spend more time on ­personal activities than on rental activities, you get no transportation deduction. You may also deduct the destination expenses you incur on days when you do rental-related tasks such as the hotel bill, 50% of meals, parking ect . Expenses incurred on personal days at your destination are nondeductible. If your trip is primarily a vacation, more than 50% personal activities, the entire cost of the trip is a nondeductible. As long as your trip is primarily for your rental activity, you can add a ­vacation to the end of the trip, make a side trip purely for fun, or even enjoy evenings doing vacation activates, and still deduct your entire airfare, rental car, or standard mileage rate if using your own car. A hint to those taking kids to theme parks.  Most the parks stay open till 11 or 12 midnight and it’s a lot cooler and less crowded in the evenings so leave the wife and kids at the pool in the hotel during the day and hit the parks at night. What you spend while having fun is obviously not deductible, but you can deduct all of your expenses while conducting rental activities. Another example, if you like to go to a particular ski resort a couple times a year. You buy a couple of rentals in and around the resort. Then take 3 days repair or improve the property, meet with the property manager, accountants, or lawyers about property then put in 2 days skiing. You can write off 100% of your travel but only 3 of the 5 days hotel stay and 50% of the meals and beverages during the first 3 days. Be careful looking at new properties might be considered “investor” activities so even if your looking at new deals while your there make sure you are also conducting other “rental related activates".

@Serg S If it were me I would just quitclam deed it back in my own name.  I own several homes in mine and my wife's personal name that have conforming loans, but many more in LLCs with commercial loans.  I treat the LLCs as "disregarded entitys" for IRS purposes so no more book keeping needed.  Bam! lawsuit one tenants dog bites another.  Attorney sues my wife.  I send a brief answer to the complaint which you have to do within 20 days in FL or you automatically lose.  I then call the Attorney explain my wife is Judgement proof.  Our personal home is judgement proof in FL our cars in one of our LLCs any cash in retirement accounts or LLCs, and the only homes we have in her own personal name has loans against them.  Even though they have good equity the cost to go foreclose on them would destroy any equity.   He sends interrogatories "questions" which we answer honestly also tying to get our insurance info, I just wrote in that question I have no insurance that covers dog bites.  6 months later he dropped  suit.   Good luck     

Joe Kim possibly but a variables may take more than I can peck out on my iPad , I'm happy to discuss with you further email me your contact info [email protected]

I have successfully represented a client in an appeal before the irs on this issue. Be careful irs only counts real estate business activity toward the 750. You can't count investor activities like research looking at new properties or going over financials ect. If you're planning on growing your portfolio you might want your wife to get her real estate license. All of her time as a real estate agent counts toward her hours, and IRS really doesn't question license real estate agents licensed contractors etc. make sure you meet with a good CPA who understands real estate rentals and hopefully owns some of their own. Ask them exactly what you need to do with your circumstance and what documentation you need to keep. Lastly make sure your wife puts real estate professional in her occupation box on 1040. And you also need to add a statement to your return says: I (your wife's name) am electing to treat all my real estate activities as a single activity, pursuant to IRC Section 469(c)(7)(A).