All Forum Posts by: Oren K.

PJ,

The one I use is a 3 lawyer shop that does all of Ohio. As they are before the BOR or appealing BOR cases all the time, they know all the other firms, the BOR members, the appeal members, etc. They just sent out a marketing blurb on how they won a case that made it all the way to the Ohio supreme court.

As is usually the case, the more specialized you are more connected you are in the 'that' world and they are affiliated with other firms US wide. I'm sure they would be happy to introduce you; not sure if the fee arrangements are the same in other places. If you would like an intro, send me your direct email address and I will send out an eIntro to the partner I worked with.

Oren

PJ,

There are not 'costs' to you. 

The whole point of the contingency is they take a share of the first year savings, you keep the rest and all the savings going forward. If they do NOT succeed in reducing the taxes, you pay nothing.

Oren

P.J.

If you don't want to bother doing it yourself, there are any number of firms that all they do is appeal property taxes. They do it on contingency and take 30%(?) of the first years savings. 

Think of it this way; for each 10K 'market value' they can get the property taxes reduced, you save a couple of hundred (or more) each year going forward.

The way I calculate property taxes for any property I am evaluating is:

    Purchase Price / Current County Market Value * Current Annual Taxes = New Annual Taxes

As mentioned, if the purchase price is higher then the county market value, they will catch up with you in due course but you have to take action if the purchase price is lower then the county value.

Oren

For MFH, pest control is common. Also, depending on the size and class;

loss to lease

credit loss

eviction costs

PM can have two parts; the flat monthly fee and then the hourly rate for onsite staff

As to who pays the utility bills; it is not so much a state requirement but 'standard' practice at your properties local area. If every one else in your area is renting with, for example, water/sewer paid, it is very hard to rent with it not paid. Even if you reduce the rent to account for the expected costs.

Hi Sal,

One possibility is to 'master lease' the property with the option to buy at fixed price by a set date. Since no sale has taken place, it should not trigger a tax change.

They get a fixed (or scheduled) payment each month and you take over the operations and can start making improvements. You are taking the risk of investing in a property you do not own. 

If for whatever reason, you do not exercise your purchase option by the exercise date, they get back the improved property and if there was some positive cash flow, you keep that.

Unless you have done this before, get a good lawyer to prepare the paperwork.

Oren

Matthew,

As always talk to your accountant but the basics are not if it is in a 'business account' but who owns the property and if there is net 'taxable income'.

From a tax perspective, the positive cash flow (I assume you mean after expenses) is one part of determining any taxes owed. Another significant part is depreciation, past losses and there are other components (again talk to your accountant). When everything is added up, that determines the 'taxable income'.

If there is a 'taxable income', taxes are owed at the marginal rates of what ever entity owns the property. If it is a company (not LLC), there is one set of rates, if it is you personally, there are different set of rates.

Hope this helps,

Oren

Matt,

This is really a conversation to have with a knowledgeable (in US <-> CDN) tax accountant and you are going to have to be more specific regarding how you currently hold them and where the new holding company will be.

Some basic points 

- If you own the properties personally or just in a (or multiple) LLC, you will pay US taxes and then CDN taxes every year; no options.

- Similarly, if you set up a CDN holding company and it owns the houses or LLC, again full income taxes are paid on both sides of the border.

- Putting the properties in a US 'C' corp (with LLC's or not) gives you the flexibility to decide when profits from the 'C' corp are repatriated. You still pay full US taxes but if defer the CDN taxes until you bring the funds 'home'.

In reverse, this is basically what Apple and many other US companies are doing in holding funds overseas; deferring their US taxes in the hope that eventually either rates will come down in general or some kind of onetime amnesty / reduced rate will be imposed.

Oren

Benjamin,

Regarding the tax write off;

Your accountant (or a decent book) should help you understand this. A very simple explanation is that all costs / expenses end up as either current or adding to the capital account. 

Current expenses are 100% / fully deducted in the year they are paid for which reduces the net income and so you pay less in taxes for the year.

Your capital account starts off with the purchase of the property and you deduct 1/27th of that amount as depreciation each year which as above reduces net income and less taxes are paid.

So if you do not expense the windows 100% in the current year, the amount you spend gets added to the capital account and deducted as depreciation over time reducing the taxes that need to be paid. There are exceptions to how quickly things can be deducted / depreciated (over 3 years, over 7 years, etc.). 

Hope this helps,

Oren

Just what I am in the middle of doing... ;)

Thanks for the the suggestions. Yes - it is all about a store / service that fits the demographics and needs of the immediate community.