All Forum Posts by: Paul Allen

From the IRS website...

• For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $103,000 to $123,000, up from $101,000 to $121,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $193,000 and $203,000, up from $189,000 and $199,000.
• For married couples filing jointly, the income phase-out range is $193,000 to $203,000, up from $189,000 to $199,000.

No problem @Natalie Kolodij (love your website, BTW, nice work!)

@Brittany Regts - happy to help. Give me a call if you're interested. I'd have to put you on an extension for this year, but we'd get it done!

How committed are you to thinking that?  :)

There is a 2-month route to CFP? 

Wish I'd known about that.

When it comes to tax deductions for interest, it matters much less how the money was acquired than what it is used for. In this case it is being used to purchase your residence. 

In order for mortgage interest on a residence to be deductible (on schedule A), it must also be secured by the residence. (Page 8)   In this case it is being secured by a rental property, not the residence itself. 

Kudos for creativity, but the IRS is way ahead of you on this topic.

Best of Luck with Your Real Estate Investing!

While looking at 'profit' as [Rent - Mortgage] has a place when analyzing cash flows, THIS IS NOT HOW THE IRS ASSESSES TAXES.

You can deduct the interest on your schedule E.

You cannot deduct principal.

You recover the principal through depreciation.

It seems like you would benefit by getting a tax professional on your team. As @Carl Fischer said - mistakes can be costly.

Best of Luck with Your Real Estate Investing!

I am a financial advisor, and I incorporate real estate investments into financial plans. I hold the CFP and EA credentials. While the CFP credential is more widely known, EA is more meaningful to real estate planning. 

I don't recommend real estate to clients who are not already in it (except REITs). The IRS calls it 'passive income' but most landlords I know are working their tails off. If you didn't walk in my door already interested in owning RE as an investment, I am unlikely to bring it up.

I've recommended note investing to a few clients, but my niche is military, so I don't have too many clients with a financial situation where note investing makes sense. It's right for a few people, though.

There are not too many advisors who incorporate RE investing into planning. Given the response to our offering it, I'd say it's been a grossly under-served market.

Best of Luck Going Forward!

TT is a tool. If you know what you are doing you can make it produce satisfactory results. (If you know what you are doing you could use a pencil and get the same result.) If you don't know what you are doing it won't save you. If you're willing to spend a couple dozen hours digging through IRS pubs to get it right, then it's a reasonable way to go. 

Or you can guess at it and let the IRS grade your homework. I amend a few of those every year. 

Best of Luck with Your Real Estate Investments!

Some SMLLCs file form 2553 and elect to be taxed as an S-Corp.

If they do, the owner can also be an employee of the S-Corp. (And draw a 'salary', although doing this with rental property is almost always a mistake.)

By convention, if an SMLLC elects S-Corp taxation we don't refer to it as an SMLLC any longer, but technically it still is. (Because 'LLC' is about liability and not taxation, and the liability protection of being an LLC is still there even if S-Corp taxation is elected...)

It's only confusing if you try to understand it.  :P

1. Yes.

2. Yes, your total income from schedule E flows to your form 1040 and would then be modified by other deductions and adjustments.

3. You do not need an LLC to take advantage of the 20% QBI deduction.

Best of Luck with Your Real Estate Investing!