All Forum Posts by: Paul Allen

That was a really good article by Brandon Hall. If you have enough income from your real estate business to arrange hiring your children as he suggests, I would do it. Otherwise, I am a fan of the Virginia 529 plan (for Virginians).

Your question seems to be "how can I save for college in some way other than the program specifically established to give me tax breaks to save for college?"  The answer is there aren't many alternatives that come close to the tax benefits of the 529 plan. If you want to retain maximum flexibility for using the investment for something other than education, you are going to forgo some tax benefits.

That said, the Roth IRA is a reasonable option, but you are limited to withdrawing only the contributions until age 59.5

One of the reasons I like the Virginia 529 plan is there is no minimum time the money must be in the account to get the state income tax break. We had some money outside the 529 that we needed to use for college expenses. We dumped it into the Virginia 529 College Wealth plan (an FDIC-insured bank account) and then withdrew it a short time later to pay expenses. It didn't get us any federal tax breaks, but it qualified for the Virginia tax deduction. I don't know whether or not MD's 529 plan allows something similar.

Congrats on the birth of your son, by the way!  Best of Luck on Your Journey!

I had an initial consultation with a new client yesterday (I am a financial planner) and he has an issue with which I am not familiar. Thought I'd post it here to see if there is some practical advice I can share with him.

In 2007 he was persuaded (duped?) into purchasing an investment property by a real estate agent (REA) with the aim of starting a rental property partnership with the REA. The property is titled jointly to Client and REA. The mortgage is in Client's name only.

The REA is now a non-participant. Doesn't pay his half of the mortgage (as was agreed upon), doesn't return phone calls. Property is valued at roughly $125K. Mortgage balance roughly $141K. Property is vacant and needs work if it is to be rented again. (I don't know how much work.)

Client would like to sell the property and be done with it. His frustration level is through the roof. I'd say his next move is to lawyer up, but I wanted to see if anyone here has some insights on how to proceed and what to expect. TIA.

@Adam Burke if you are referring to managing and growing your real estate portfolio, you may be in for a tough slog. There are not many financial advisers who do that kind of work. 

If you are talking about managing and building your portfolio of stocks and bonds you will have more advisers to choose from.  If you wanted to kill two birds with one stone you could look for a CFP who is also an EA or CPA. Or you could look for a CPA who is also a PFS.  Just make sure they understand the tax implications of your real estate business. Not all tax professionals do!

Hi @Adam Burke and welcome to BP!

The term "financial adviser" is somewhat nebulous. It might be helpful if you list the specific services you are looking for. i.e. tax planning, retirement planning, estate planning, investment management, insurance, etc.

Best of Luck on Your Real Estate Investing!

@Brendan L. When did you take your $5500 back out? If you removed it from the account before the tax filing deadline (April 18), then you have essentially reversed the contribution (which is different than taking a distribution). Section 408(d)(4) covers this.

If that is the case, then you would still have a full $10,000 you can take out penalty free for a first-time home purchase (assuming you are qualified in all other respects). You can't get the deduction on a reversed contribution, so don't bother amending if the contribution was reversed.

If the withdrawal came after April 18, then it is a distribution. You probably want to amend to claim the deduction in this case. (Why did you skip the deduction in the first place?) If you have a mix of deductible and non-deductible contributions in this IRA you probably want to see a tax pro if this withdrawal is a distribution (vice a reversal of the contribution).

The withdrawal limits are pre-tax.

Best of Luck!

@Shawn M Hannan I think I more closely fit the description of a financial planner who is not afraid of real estate. Or maybe, 'who views real estate as an asset class that can and should be worked into a financial plan'. 

In other words, I am not a real estate expert. My value to a REI would be in developing the rest of the financial plan.

@Michael Doll even if you rent the room to an enemy.

 Doesn't CreditKarma use Experian and Transunion for credit scores?

I'm not suggesting a credit report isn't also valuable, I am just trying to understand why CreditKarma is being described as an inferior way to get your credit score.

Who do you recommend? 

@Michael Doll the depreciation schedule starts the day the rental unit is 'placed into service'.  Placed into service means READY and AVAILABLE to be used in your trade or business (in this case the business of renting residences). 

So...

You bought the duplex on 1/1/2014 and moved into unit A the same day

You made Unit B ready and available to be rented on 2/1/2014

You got a tenant for unit B on 3/7/2014

You moved out of Unit A and made it ready and available to rent on 8/7/2017

You got a tenant for Unit B on 10/1/2017

You start depreciating Unit A on 2/1/2014 and Unit B on 8/7/2017 (and actually the depreciation starts on the 15th (2/15/2014 and 8/15/2017) because of mid-month conformity for residential rental properties.)

Taxes are easy.  :-0