All Forum Posts by: Liz Ridgway

Hi Everyone

I discovered the BP Podcast through my love of personal finance. I am not really a RE Investor yet, although I do 'own' a condo in Orlando, FL which was converted to an investment property after I moved away.  (I bet you all understand the reason for the quotation marks!)  My job keeps me moving so I will convert my current North Richland Hills, TX home to a rental in a few years too.

I just wanted to say thank you for all of the warm welcomes from members and the the BP team.  The resources available here are incredible!  I am slightly addicted and can't wait to start playing with some of the spreadsheets.  Depending on what I learn, I will be looking to do my first deal in the back half of 2017.  Concentrating on buy and hold for cash flow, minimal rehab.

~ Liz

hi all, new to BP and this is my first post. I am in the exact same scenario described by @Rich McCormak with the same dates, valuation, rental environment, converting at a lower FMV vs purchase price. Additionally, my income is now in the phase out level for claiming passive losses. I am able to claim about 50%. I have negative cash flow of 35%/$13k annually, under water by $20k, refinanced at 4.99% on a 30 yr fixed. I'm paying more than I owe b/c I don't see any way to get out of this until I have equity....but not sure it makes sense to take the depreciation recapture tax and a potential capital gains tax. Condo and HOA dues are 2/3 of the current negative cash flow

My question is about how closely the IRS looks into these situations.  Does anyone know what elements get picked up by the IRS system and might trigger an audit?  I understand the basis is the lower of the purchase price vs the fmv at time of conversion, but I just stumbled upon that while researching.  What if I didn't know and I used my purchase price as my basis?