All Forum Posts by: Account Closed

So if your actual profit is $180k (often what people consider profit isn't true taxable gain) then your income is now $180k (Give or take for deductions/credits) for the year- and your gain will be based on that accordingly.

@Natalie is my understanding correct that pretty much any SFR real estate transaction that is Not Intended to be a rental, such as Wholesaling (Assigning), Selling Turnkeys & doing Fix & Flips are all treated the same for tax purposes? No depreciation, few tax write offs, ordinary income?

For instance if an investor made $100,000 wholesaling "profit" (after costs), and $100,000 selling Turnkeys (after costs) and $100,000 doing Fix & Flips (after costs) for a total of $300,000 in a given year, would they all be treated as ordinary income and be subject to self employment tax as well?

From $300,000 what would be left to spend? (It isn't a test ;-) I've just never had anybody explain what winds up in my pocket in that scenario and a Search didn't provide the answer) Thanks for your time.

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Originally posted by @Michael Plaks:

@Account Closed

The solution is to amend your prior tax return and remove it as income. It never was income, it was a loan.

Brilliant! Thanks.

Will that trigger an Audit? Seems like the kind of thing that would.

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@Michael Plaks

Last year a partner and I planned on doing a project together. He funded my single member LLC with $50,000 to buy a property and the deal fell through. (He is not part of the LLC)

Since it was money "In", I included it as income on my taxes last year on my Schedule C, so it has been taxed. The money has just been sitting there and since we can't find an appropriate property I am going to transfer the money back to him. I'm going to pay him interest on his money.

What I'm not sure about is where to apply the funds & interest, is it Schedule C "Returns and Allowances" or is there a better place on Schedule E since it was intended for real estate investing and is accumulating interest? Can you suggest a solution?

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Originally posted by @DeAnna Henson:

Hi All,

Looking at a duplex that a foundation company has quoted ~$500/pier to tear out and replace. Looking online, this doesn't appear to be the most complicated thing - particularly because the crawl space is big enough to get under. I would think ~4-5 bottle jacks, some pre-poured 3000 PSI concrete piers/bases, shims, blocks, and a level to get this thing supported correctly.

Am I grossly underestimating the complexity of this? I know you risk damaging plumbing and more by jacking the house up, but if you take it slow and make sure you're distribution is even, seems to be the same risk as letting a contractor perform the work.

Another point - does the fact that this is DYI invalidate the work in the event of an inspection pre-sale? Assuming piers were placed correctly originally.

Eager to hear your thoughts!

I've replaced the odd pier here and there. Buy or rent a couple of house jacks and support both sides of the pier you are replacing and remove and insert. Don't assume they are all the same length. The ground is not perfectly flat under a house. They are cut to length on site. Since they are exposed to the elements you may want to treat them. Keep your fingers out of places they shouldn't be and use whatever brackets are code to tie it all together. Put a long level on the section of the floor above where you are working so you can check for level from time to time. Have someone help, it's at least a two person job.

1 Vote

Originally posted by @Basit Siddiqi:

@Jason Graves

Congrats on accumulating so many rentals in such a short period.
I just read your profile and you are an accredited Investor.
Cost Segregation is great and has many benefits but it doesn't benefit everyone.
You should have a consultation with a tax advisor and a cost segregation expert to see what the cost of the cost segregation is and if it will benefit you.

@Basit Siddiqi Last year a partner and I planned on doing a project together. He funded my single member LLC with $50,000 to buy a property and the deal fell through. (He is not part of the LLC) Since it was money "In", I included it as income on my taxes last year on my Schedule C, so it has been taxed. The money has just been sitting there and since we can't find an appropriate property I am going to transfer the money back to him. I'm going to pay him interest on his money.

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Originally posted by @Jeffrey Harden:

@Account Closed Thanks for the reply!

So when you created your 3 page agreement for Texas, did you find an attorney in Texas to help review your contract to make sure it was within the laws?

I don't wholesale but yes, a Texas attorney looked at my paperwork before I got started.

Look for a local REIA (Real Estate Investment Assoc.) group in your area and join. Typically it's about $20 a month and you get access to attorney's CPAs,Title companies, flippers, buy & holds etc.

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Originally posted by @Dan Perrott:

We are looking to submit an offer on a SFH held in a trust. One of the statements seller has said must be in our offer is the following:

"Conveyance of this property shall be by TRUSTEE DEED subject to taxes, easements, restrictive covenants and encumbrances of record unless otherwise agreed"

Questions are:

1. Does the Trustee Deed transfer ownership of the property?

2. Does the Trustee Deed provide clear title like a warranty deed?

3. Can I get title insurance to protect us? Or how can we protect ourselves from missed taxes, loans or liens as I understand that trustee deed does not provide the protection.

The property is in Indiana and the Trustee (Regions Bank) is located in Wyoming. They are saying we can select a title company to close but they are using Dominion Title for trust related manners. Buyer may chose to close elsewhere but then we will have a split closing.

Any information that can be provided is appreciated.

It simply says they wound up with the property through a foreclosure action. The Trustee Deed is different from a Warranty Deed. A Trustee Deed says they will guarantee the Title from the date they took it back but can't for sure know what other claims might be out there. It does Convey (Transfer) Title. Out West we use "Special Warranty Deed" for foreclosures that went through the sale. If a Title Company will issue Title Insurance on it, then it shouldn't be any problem. Just read the "Exceptions" and see if there is anything you don't understand, then ask an attorney. It's rarely an issue.

1 Vote

Originally posted by @Scott Scharl:

If you could start a company to solve 1 main problem in the real estate investing world (but not actually invest in real estate itself), what company would you build?

Facebook.

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Originally posted by @Jeffrey Harden:

Hi, everyone

This is my first post here on biggerpockets, it's nice to meet everyone!

So just like most newcomers here, I'm fairly new to real estate/wholesaling and been doing a lot research to grasp a good understanding of it. I've been reading a lot of old discussions regarding the topic of wholesaling in Texas and found the information to be very valuable. Lately I've been stuck on whether to use the TREC contract or a one page purchase contract for the assigning process. I did my research on the TREC through Youtube videos and learned the importance of it. However, I feel like when presenting the contract to the seller they'll feel intimidated by how thorough and lengthy it is compared to a one page purchase contract. I noticed here on biggerpockets that it really comes down to the wholesaler preference on which contract they want to use. I wanted to know for those who uses the TREC, do you sometimes experience resistance from the seller when presenting the contract? If you do, how do you help better explain the contract to them in order for them to feel more comfortable?

I invest in Texas. TREC is used to protect the real estate agent and the real estate broker. They have great liability in representing clients. If you are not a real estate agent it is unlikely you have as much at risk as they do. The purpose of TREC and any Purchase & Sale Agreement is to give the terms of the sale so that everyone is clear about what and when things happen. You then give your 1 page or in my case 3 page agreement to the closing attorney or escrow company who then does everything else. A 1 page assignment, properly crafted, would have the same effect as far as a wholesaler is concerned.

1 Vote

Originally posted by @Eamonn McElroy:

@Account Closed

Might be able to S179 personal property like computers, office furniture, etc if they're above the de minimis level for a flipping business if it scales to that level. Otherwise agree with @Natalie Kolodij

"I can't decide if it's a flip since it's going to an investor not a home owner or does that point even matter? Is that treated any differently than Wholesaling where they don't take the property into their name and they sell the assignment?"

Doesn't matter what the buyer is doing. What you're doing matters.

So, if I am to understand correctly, basically:

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All Forum Posts by: Account Closed

Account Closed has started 9 posts and replied 390 times.

Post: Do i qualify for 0% capital gains tax?

Post: Tax advisor/Tax prep

Post: Tax advisor/Tax prep

Post: DIY Pier and Beam Repair?

Post: Tax advisor/Tax prep

Post: Texas Wholesaling - Explaining the TREC to sellers

Post: Does a Trustee Deed transfer ownership?

Post: Entrepreneurs: Don't Invest in Real Estate

Post: Texas Wholesaling - Explaining the TREC to sellers

Post: Bonus Depreciation - Schedule E vs C