All Forum Posts by: Jake Hottenrott

This thread makes my head hurt.

@Natalie Kolodij, @Brandon Hall and @Ashish Acharya have it down.  Wholesaling is an active trade or business.  Whether you "purchase" the property and then sell it or you **assign** it, it really makes no difference.  I would bet that of the wholesalers we work with, a majority never own the property.  

@Account Closed, you want a real estate/tax attorney to weigh in on this.  I present to you an article from Lee Chen, CA attorney,  that lumps "**assign**ment" wholesaling in with wholesaling in general.

https://kkoslawyers.com/legal-tips-for-wholesaling-real-estate/

- Not all wholesalers are assignors, but all assignors are wholesalers.  

I hate to be even slightly wrong but  I'll defer to @Steven Hamilton II and @Logan Allec 's reasoning and support.  Excellent work.  

@Natalie Kolodij - I think you nailed it.  The IRS designations are not Commercial and Residential, they are Residential property at 27.5 years and Non-Residential property at 39 years. 

While the Short Term rental may play a role in determining whether it's a passive income or an active income stream, the depreciation should still follow the use of the building, a residence.

@Joshua Lounsberry - you should connect with @Natalie Kolodij, she’s active on the site and speaks at a few REIAs up your way.  She might be what you are looking for if she has any room for new clients.

@Megan Hirlehey - Talk to your CPA, this should be a service they provide.  Typically they will sit down with you and do a tax projection as often as you need, monthly/quarterly annually, etc.   This projection will allow you to make your quarterly tax payments for the Federal and State on time.  In the mean time, I typically tell my Self Employed individuals to stash away in a savings account (away from their operating account and other spendable cash) their state rate + 15% for Self Employment Tax + XX% Bracket for Income tax that we project out.  Hope that helps!

Do you invest in real estate yourself? When would you recommend creating an LLC vs an S Corp vs a C Corp? How do you recommend tracking my expenses? How can I implement the recently enacted repair regulations? How am I billed if I have questions throughout the year? What documents do you need me to provide and when?

Ask about their plan to prepare your taxes. It should start with a consultation, a few meetings, and planning your short term and long term strategy. If they say, you drop your stuff off and we prepare your taxes and call you when it's done. You end up getting what you pay for.

@Account Closed and some of her posts and work here. She's very knowledgeable in the REI niche. She's also speaking speaking at two different REIAs in the South End during November and January.

Best of Luck!

@Jason D. - The LLC does not have to formed in the state you are located in. You can definitely use a registered agent to form an LLC in any state. Now you can register in your home state and then register as a foreign entity in each state that you do business.

@David D'Ambrosio - You will want to speak to an attorney to see what is best from a legal perspective on where to start your entity and if there are substantial benefits to be had by doing that vs what it cost to set up a more elaborate structure.  As a CPA, I'll speak from the tax perspective and say that it doesn't matter what state your entity is set up in.

Do you invest in real estate yourself? When would you recommend creating an LLC vs an S Corp vs a C Corp? How do you recommend tracking my expenses? How can I implement the recently enacted repair regulations? How am I billed if I have questions throughout the year? What documents do you need me to provide and when?

Ask about their plan to prepare your taxes.  It should start with a consultation, a few meetings, and planning your short term and long term strategy.  If they say, you drop your stuff off and we prepare your taxes and call you when it's done.  You end up getting what you pay for.

@Sarah Hunter - @Dustin Davis is correct when he says that your current CPA should be able to handle the basics. Many CPAs are general practioners, meaning they will do any type of tax work that comes through the door. I know, I used to be one when I first started my practice. If you ever find that your current CPA does not know enough about REI, there are many great CPAs to chat with on this site.

Also, @Dustin Davis is incorrect on his statement that out of state rentals will be taxed at your home state rate.  You will need to file a tax return in the state of the rental for the income and expenses attributed to that state.