All Forum Posts by: Stuart M.

Thank you. 

If you buy a prop in Jan and put in service in july can you put the half on sched A and half on sched E if RE taxes are 12k, to avoid 10k limit?

If rehab is 2 years, can you elect to do this in the second year if you missed the first?

If you never filed a return, when you file a year late are you out of luck?

Last question on this, besides RE taxes, any other common expenses this applies to? Would these additional items, if they exist, go on sched A, c, or E?

Can you put the real estate taxes on your schedule A while the property is undergoing renovations, before the property is placed in-service?  I was under the impression that you cannot, that they must be added to the basis, but then I found this post from @Steven Hamilton II:

https://www.biggerpockets.com/forums/51/topics/42509-deducting-rehab-costs

Are there any other exceptions to this "rule" that you must capitalize all costs during the rehab?  Was this real estate tax thing true before and after the Tax Cuts Jobs Act?

LOL this seemed like an easy questions considering the only two conditions for properties are "ready to be placed in service" or "not ready to be placed in service" so this obviously has been determined millions of times before, weird there is no agreed upon answer.

BTW if you get "special" (construction is what they call it) insurance during that period, it would get paid at the same time and cover many of the same perils and liabilities (including fire).

BTW other than "hard money" there are "construction/rehab loans" which are conforming and backed by at least Fannie.

Anyways, our income has gone to zero (unlike those who don't take this seriously), rent and mortgage are due on the first, and I'm just trying to get our return done and get a refund, but let me go hire a CPA, thank you for your help.

Maybe you could offer to take on my case gratis in these trying times?

 Thank you, I guess I should have deleted point 2 because that's the one point that didn't apply to my situation, 1 and 3 are the ones I'm confused about because they make no sense.

 Can you help me understand how this translates to pen on paper?

#1, you say is a deductible expense.  I was under the impression that you could not deduct expenses until the property was placed in service.  Say you purchase "fire insurance" the day you close on a property, but then you renovate for 6 months, then you place the property in service.  On what form/line would you put "fire insurance" (and is "fire insurance" what the rest of us call property insurance that covers all perils)?

#3, you say you amortize over the length of the loan, so i take that as dividing it over 30 years if that's you loan and then expensing it over that 30 years, but A) again, what happens if you renovate for the first 6 months of your loan and the property isn't in service and you're not allowed to add the first 6 months worth to basis, and B) again, what form/line would this go on?

In publication 527 it says:

"The following are settlement fees and closing costs you can’t include in your basis in the property.

1. Fire insurance premiums.
2. Rent or other charges relating to occupancy of the property before closing.
3. Charges connected with getting or refinancing a loan, such as:
   1. Points (discount points, loan origination fees),
   2. Mortgage insurance premiums,
   3. Loan assumption fees,
   4. Cost of a credit report, and
   5. Fees for an appraisal required by a lender."

So, my question is, how do you account for these fees when doing your taxes?  They are clearly expenses that you have in purchasing a property for rent, and if you don't place the property in service right away (say you renovate for several months), I was under the impression you *were* supposed to add *all* costs to the basis and not expense them.

And what is "fire insurance premiums"?  In FL we have property insurance which covers liability, fire, wind, etc. Am I supposed to guess what percentage is for "fire"?

Perfect, thank you. Do you know what fannie/freddie will let you go to DTI on this cash-out refinance on an investment property then?

If you have a first mortgage, and a heloc, on an investment property, and you want to roll them up into one mortgage on that investment property, would that be considered a cash-out refinance or is this just a regular refinance?  You're just rolling both liens/loans into one.

Does anyone know of banks that offer 80% refinance on an investment property that would roll both of these up into one?  Or is 75% the max? 70%?  Penfed doesn't seem to offer this.

If you want to know why one would consider this, imagine you have paid down a ton on the first lien, but the fixed payments don't change, and you want lower total monthly payments so you can use the extra money somewhere else.

 Lol this is exactly it.  The appraisal process is a disaster.  I got a low appraisal with DU at Penfed and I laughed and asked for an actual appraisal.  They called ServiceLink or whoever and sent out a clown that knew less than nothing, compared a fully remodeled home with 100k+ in it to the worst dogs he could find, wrong/bad neighborhoods, flood zone home, etc, a complete and total joke.  Then he wouldn't correct his own appraisal (imagine that.)  Had I known I would have taken the DU value, it was sad but survivable.

Called SCCU and now we are gun shy, I've gotten precisely one bad appraisal in my life (above) but I'm too afraid to ask for a new clown to be sent out, I'm just taking the DU value. (Oh, and because they won't include the rent in income, it wouldn't help anyways, can't go higher without the rent income, DTI maxed out.) The rate is better but min payment is worse, oh well. What a waste of time and money.

I wanted what you wanted but I haven't played this game long enough.  Next time I go for immediate appraisal and take DU value and use that for renovations instead of paying out of pocket and then having an incompetent appraiser blow everything up after its fixed up.  I never understood what people were talking about, "bad appraisals," instead I've set records in the neighborhood and had banks question the appraisers for using too high of values, too many upward adjustments, etc.  *Nothing* has ever not appraised for *more* than I expected. This is totally foreign to me.  And I was ready for a "low" appraisal, this was just catastrophic.  Unbelievable.

This is why I'm trying to collect as many options as I can at this point, I never want to be "stuck" again.  Its my fault for not having multiple contingency plans, incompetence is everywhere, you need to be prepared.

 They will only do 75% unfortunately.  SCCU will do 80% at least.  But if SCCU falls through then maybe I'll be on to them.  The weird thing is they said I had to come into a branch and sit down and apply and she couldn't answer the most basic questions, she always had to call someone else.

Next time we are moving into the place for 1 day, getting a 90-100% HELOC with great rates and no hassle, and then moving back out.