All Forum Posts by: Michael Plaks

@Michael O.

Here is a quote from this FAQ published by one of the many companies that specialize in SDIRA:

I only have a small IRA. How can I buy real estate?

There are at least 4 ways you can participate in real estate investment even with a small IRA. First, you can wholesale property. You simply put the contract in the name of your IRA instead of your name. The earnest money comes from the IRA. When you assign the contract, the assignment fee goes back into your IRA. If using a Roth IRA, this profit is tax-free forever! Second, you can purchase an option on real estate, which then can be either exercised, assigned to a third party, or canceled for a fee. Third, you can purchase property in your IRA subject to existing financing or with a non-recourse loan from a bank, a hard money lender, a financial friend or a motivated seller. Profits from debt-financed property in your IRA may incur unrelated business income tax (UBIT), however. Finally, as mentioned above, your IRA can be a partner with other IRA or non-IRA investors.

My comment: don't attempt any of the above without talking to knowledgeable tax and real estate advisors first. You can find many of us on this forum.

Maybe $25k. Technically, even $5k can be used to start doing real estate. For example, buy options. But it is a more advanced strategy, and I would not recommend it to someone new.

I suggest you start reading as much as possible about self-directed IRA investing and, if available in your area, attend local REI meetings to network with people who do it already. You might even be able to find someone who can guide you - but trustworthy mentors are a scarce commodity, unfortunately.

@Account Closed

There're only 2 kinds of arguments: we either call two different things the same name - or we call the same thing two different names.

Every CPA and attorney out there that I know of interprets the new law the same way. The problem is most likely in how you interpret what they say. In other words, there is no actual disagreement.

SALT is for personal properties (where you live yourself) and non-rental investment properties (vacant land). Rental properties of all kinds are outside of the SALT arena and are NOT affected by the tax reform.

If you can find any published article that says otherwise - please post a link, and we will gladly point out where you misinterpreted it.

Do SALT changes affect the real estate prices? Yes, because the homeowners (wrongly) believe that their incentive to own a home has been removed. So yes, there may be an indirect hit on flippers who will find fewer buyers. Maybe, as I'm not an economist. But if anything, it should help landlords: more demand for rentals, and all expenses are still fully deductible.

@Dave Toelkes

We cannot "give him" the credit because the tax law won't.

The NQU formula only considers periods after 2009. Earlier history is disregarded.

@Mark S.

Something personal could have happened - like a family crisis, a health issue or even death.

I like @Michaela G.'s suggestion to contact the neighboring businesses - however, if he is a one-man shop, he might not have a physical office and work from home.

Since 2017 returns have been filed, you probably can afford to wait a little longer. Meanwhile, tax planning questions, if urgent, can be discussed with another tax professional.

The thing that trips most people looking at this rule is MOVE-BACK.

Scenario 1. You live in the property for 2 years, move out, lease it out for 3 years and sell - WITHOUT moving back. You can get the entire capital gain excluded, except for recapturing depreciation taken during the 3 years.

Scenario 2. You live in the property for 2 years, move out, lease it for 2 years, then move back for another year and sell. Sounds like you should be in a better position, right? You only had 2 years of leasing, while in the 1st scenario you had 3 years of leasing. But the move-back is the problem. Because of moving back, the non-qualified use rule kicks in, and you can only exclude 60% of the gain.

Slightly different, and slightly incorrect. :)

The NQU rule is effective after 2009. Everything prior to 2009 does not matter. 

@George Moehlenhoff

It's cheap if he does it well

@Chirag Shah

As @Daniel Hyman said, most (if not all) of us real estate accountants on this forum work with clients remotely and nationwide. So, it does not really matter, especially when you have businesses in multiple states. And neither FL nor TX have state income tax, as you know.

@Jacob Rivera

S-corporation is usually a bad choice for holding rental properties, tax-wise.

Why did you decide to use an S-corp?