All Forum Posts by: Ryan Lane

Well, because you live in TX, the property tax deduction on your personal return is more valuable than it is in most states. That's because of the $10,000 SALT limit on schedule A. Where in other states this amount includes the state income taxes you pay (which by itself amounts to more than $10,000 for some people), TX doesn't have state income taxes, so the property taxes will count more towards your itemized deduction total.

The deduction is more valuable on a rental property because you can deduct the full amount on schedule E, without much limitation (subject to certain rental passive income/loss rules).

Some states/counties/localities, will provide tax rebates or credits for installing certain high-efficiency HVAC systems. So if you are ever looking to replace those pieces, I would look into that piece. Though it's not worth spending several thousand to upgrade a system that doesn't need it.

As a personal primary home, you can exclude $250,000 of gain ($500,000 if married) upon sale. But this is subject to certain rules.

There's also the 1031 exchange route to defer your taxable gain into a similar property. Again, this also has many rules. And it's important to note that it's not circumventing the tax -- you'll eventually pay the tax unless you hold the property until death.

These are fairly common strategies, but not everyone takes advantage of them properly.

Hi, @Mary Jay. You would take your wages, taxable interest, ordinary dividends, taxable social security income, etc. Add that all together. Then add in the net income from any schedule C business or schedule E rentals and pass-throughs. That will approximate your MAGI because some of the adjustments you to total income to arrive at AGI have to be added back for MAGI purposes. Though you'd need to add back losses from PTPs, rental losses, and some other pieces.

When in doubt, speak with a CPA who is well versed in your situation and they'll be able to provide a more definitive number for you.

Hey @Whitney Robert Caldwell, I second what many have said. There are some great fellow CPAs on this site with excellent real estate experience. I would suggest reaching out to several of the suggestions and speaking with them on the phone. Ideally you'd want someone who has some experience with foreign ownership (for your MX condo).

Send me a message if you need help formulating any questions to ask them. Happy to help.

On the 2019 1040, line 7b is going to list your total income. After this, you subtract out certain adjustments to your total income (many people won't have adjustments here). The resulting number is your adjusted gross income, "AGI." AGI is now line 8b.

You're referring to the 2017 1040 -- where line 22 was total income. But this form is out of date and has substantially changed over the last two years.

MAGI is your AGI with any tax-exempt interest income and certain deductions added back. So you have it backwards, if anything your MAGI will be equal to or higher than your total income.

Are you looking for tax information related to owning a personal home or a rental property?

@Mike M. I agree with, @Nicholas Aiola. There's some great resources on this website. I'm a newer participant on the forums and I've been very impressed with the talent on the sites. There's several CPAs who are very well versed in real estate taxation.

Thanks, @Drew Sygit. I didn’t even think about the free trials and just messing around with the accounts. I’ll look into doing that! Next I’ll see if someone might trade some work for learning. 

I can’t think of a particular tax consequence. Normally, If a tenant makes an improvement in lieu of rent, the improvement is counted as income. But this is a different scenario. 
From an accounting perspective, it’s always best to keep personal income and expenses separate from business income and expenses. So I’d still say it’s beat practice to have her pay you rent and you separately pay her for internet. 

As always, you would want to talk with your personal CPA who has more intimate knowledge on your situation.

One of the reasons you want to keep these two forms of investment separate is because of how the IRS is likely to treat either. In the eyes of the IRS, flipping is more akin to a normal business (like the act of renting a property or construction), so they typically seek to tax this at ordinary rates. For long-term rentals, however, the IRS is more kind with its tax treatment. They'll treat the holding of the property as an investment acted, subject to the capital gains tax law and regulations.

Now, you could accomplish this using two separate LLCs. LLCs are typically easier to setup and, if structured properly, can provide enough protection. Depending on your situation, a different form may be better for the flipping business, but I would discuss this with your lawyer and CPA. A REIT is really for a more specific type of investment, which I don't think would be beneficial here.

The most advantageous and simple form for this would be to setup an LLC and have it treated as a partnership for tax purposes. A REIT is really for a more specific type of investment. In addition S corporations and C corporations have some rules that make them a less effective form of ownership compared to an LLC for real estate.