All Forum Posts by: Paul Allen

@Greg Rollins, As long as you are active duty with a home of record in Florida no other state can tax your MILITARY income. However, if you have another source of income within the state where you are stationed - such as from a rental property - you may be required to pay state income taxes on the income from that other source. Each state is a little different in that regard. You should check with a tax professional in the state where you are considering purchasing rental properties to get the specifics.

Enjoy the heat over there, and thank you for serving the United States!

I don't doubt you, but has this ever been quantified? What is the standard deviation on a Lending Club portfolio? Just curious.

Sorry to be morbid, but the best way is likely via the transfer of the estate upon death. If transferred with her estate you get a step up in basis to the FMV of the property on the date of death. If transferred as a gift while she is still alive your mother's basis in the property becomes your basis in the property - which can lead to higher taxes for you later if you decide to sell.

This is all based on my presumption that the property has increased in value since your mother acquired it, such that her basis is currently lower than the FMV of the property.

Talk to a tax professional and work the real numbers to see what the consequences of gifting will be.

Best of Luck on your REI adventure!

@Carolyn Morales

Hopefully you had a discussion with your CPA about your tax strategy for after the property was paid off BEFORE the property was paid off.  What did s/he recommend at that time? 

Nice lady came to see me yesterday. 73 years old. In March 2016 she moved $30,000 from her IRA to her checking account and then a few days later she moved it to another IRA. An indirect rollover. That went so well she decided to move another $40,000 from her IRA to her checking account and then into her new IRA in July. 

The problem is taxpayers are only allowed to make one indirect rollover per year. The IRS has disallowed her second rollover. She has to remove the $40,000 from her IRA and declare it as income. This elevated her AGI to such a level that 85% of her Social Security is also taxable now. Between federal and state she owes more than $15,000 in taxes.

She had no idea about this new rule, of course. She also didn't know there was a way to accomplish what she wanted accomplished that would not have been taxable (trustee-to-trustee transfer).

What you don't know about taxes can end up costing you a lot.

@Eric James If it was a Roth 403b you can roll it over to Roth IRA. If it is a traditional 403b then you can roll it over to a traditional IRA and then convert it to a Roth IRA. The conversion will be a taxable event. Learn the tax implications BEFORE you convert, as they can be significant.

Best of Luck on Your Journey!

How does that quote compare to others you have received?

By Jove, I think you've got it.

Hi Matt. Welcome to the US!

While there is a 'mathematically best' answer for all of us, Financial Planning also needs to include your personal preferences. It is probably best to sit down with a FEE-ONLY, FIDUCIARY financial planner and work out a plan. Find one who is willing to prepare a plan with you even if you don't want help managing your investments.

This business (my business) is filled with sales people masquerading as planners. Search for a FEE-ONLY, FIDUCIARY planner, that will help you separate out most of the hucksters.

Best of Luck on Your Journey!

If you were stationed more than 50 miles from the house from 2012 - 2016 you may be able to disregard that time in your calculation of the "lived in for 2 in the last 5" test.

See page 6 of pub 523 for details.

https://www.irs.gov/pub/irs-pdf/p523.pdf

Also, you don't pay tax on "equity" when you sell a house. You pay tax on unrecaptured section 1250 gains (depreciation recapture) and capital gains. (So you may want to look at those numbers if you're trying to estimate your tax burden when you sell - not the equity.)

Getting out of the tax on depreciation recapture if you rented the house is nearly impossible (if you have income), but you might be able to get a section 121 exclusion for the capital gains based on the "stop the clock" provisions for deployed military personnel from pub 523 (referenced above).

Thank you for your service, and GOOD LUCK!