All Forum Posts by: Paul Allen

Your loan is from your parents - it doesn't matter where they got the money. (Well, not to YOUR taxes.)

Check out IRS Pub 535 Chapter 4. If you and your parents have a true debtor-creditor relationship with respect to this loan, you should be able to deduct the interest paid to your parents. If you pay your parents more that $600 of interest in a year they should issue you a form 1098. 

Keep amazingly good records. 

@Phineas Howie you are confused about the necessity to take the depreciation expense on your taxes. Whether you claim the depreciation expense or not federal tax law REQUIRES you to adjust the tax basis of your property for all depreciation "allowed or allowable".

As I explain it to my clients: The IRS is extending you a bowl of money and saying "you can take some if you want, however, whether or not you take any, we are going to tax you as if you have taken it." (In which case, it only makes sense to take it.)

Best of Luck with Your Investments!

You need have an economic reason other than tax avoidance for the IRS to consider your activity to be something other than a tax shelter. It's called the Economic Substance Doctrine. Based on what you have posted I think the IRS would use it to disallow your deduction of rental expenses.

@Khadijah Celestine first - well done on the hard work you are doing to get your financial house in order. That's awesome!

Applying for credit can adversely impact your credit score. You can get some details on that here: https://www.thebalance.com/factors-affecting-credi...

You may want to see if there are some other steps you can take to bolster your credit score before applying again. 

Best of Luck!  

 Since "accredited" is SEC fancy-speak for "has enough money to take risks we don't regulate" what, I wonder, might be the motivation of an investment manager to bend the rules to qualify someone as accredited? Proceed with caution, friend.

You can still deduct rental (a.k.a. passive) losses, however, the passive losses may be suspended over $100,000 MAGI.

[/taxnerdstuff]

As for your original question, you can buy some products at thetaxbook.com to answer your question, or just start building your own list.  For the Single Filer I would add 

• Lifetime Learning Credit eligibility phases out at $55,000 MAGI
• Child Tax Credit phase out starts at  $75,000
• Traditional IRA deductibility with active participation phase out starts at $62,000
• Student loan interest deduction phase out starts at $65,000

The Internal Revenue Service has provided temporary relief from certain requirements of the Internal Revenue Code to allow owners and operators of low-income housing projects located anywhere in the United States and its possessions to provide temporary emergency housing to individuals who are displaced by a major disaster from their principal residences, regardless of income.

https://www.irs.gov/newsroom/low-income-housing-un...

https://www.irs.gov/retirement-plans/required-minimum-distributions-for-ira-beneficiaries

With a non-spouse inherited IRA you have (up to) 4 choices:

-Cash it all out now

-Cash it all out over 5 years

-Take required minimum distributions based on your life

-Take required minimum distributions based on the life expectancy of the oldest beneficiary of the inherited IRA

Each of those options has different tax implications. None of those options includes "taking $100,000 now and letting the rest sit in the inherited IRA until I make another plan". (Not saying that was where you were going, but just wanted to make sure that was understood.)

Make sure the custodian of the IRA (Fidelity, Schwab, Vanguard, whoever...) knows what you want to do. Once they distribute it you can't put that genie back in the bottle. (I've had numerous clients who wished they could!)

Determine the end before you begin.

As a financial advisor I am frequently asked "How should I invest?"

My answer often perplexes people: "What are you trying to achieve?"

Most people have a very difficult time setting specific investing goals. They say things like "I want more money" or "I want to retire comfortably".

I cannot plan for those non-specific goals. However...

"I want to retire at age 60 and have $20,000/month (2017 dollars) of income until I die at age 95" is something we can make a plan for.

So before you invest, determine your specific goal(s). It makes planning to achieve them reasonable.

Best of Luck on Your Real Estate Investing!