All Forum Posts by: Victor N.

@David Barnett @Priyanka K. Point taken David. I wasn't clear enough, I meant in answer to the OP's original question, that generally you can't make an expenditure in 2018 (further assuming the taxpayer reports on a cash basis) and simply decide to report the associated deduction in 2019. Of course, in an appropriate case and subject to the new limitations in the TCJA, you could carry forward NOL's or suspended passive losses, excess long term losses, excess 179 deductions and the like. The OP asked about Schedule C deductions offsetting W2 income where he had no revenue in that year. I don't think an NOL or excess 179 is likely if the return is properly prepared.

Discovery in the lawsuit will require you to turn over your records and figures for the job plus pay your lawyer to handle it. Why not sit down with your partners and disclose everything that will come out anyway, then try mediation if you can't settle it. If you really did the work at cost, there should be no problem giving them the evidence they will soon get anyway. If you marked up or charged a profit, time to make it right.

The lenders should be adding back noncash deductions like depreciation to your rental income and adding your Social Security benefits in order to underwrite ability to pay. I don't know if they will also back out extraordinary events like the losses on the sales but it would seem likely. If there are accumulated net operating losses from a portfolio of 11 paid off properties, I would be concerned about operational management. Try local banks and credit unions. You probably need a portfolio lender.

Replacing the roof will not affect the rent. Replace it if it needs it to protect your investment. A roofing crew can replace it in a few days with the tenant in place. I wouldn't do the other improvements unless they would be paid for with increased rent in 18 months or less. Replacing appliances should be done if they no longer function or are so old that they can be expected to break down. Obviously, the tenant accepted them so they are probably fine. Again there is no need to vacate the unit to replace appliances. You could ask the tenant if they would like new appliances and if they would agree to pay $50 per month more rent to get them. Exterior paint may make it easier to rent but probably won't affect the level of rent very much in comparison to the cost. Exterior paint should be done when needed to protect your investment and can be done anytime, weather permitting, with tenants in place. The good news is your tenant is month to month and will probably expect a rent increase with new ownership. I would consider a $25 per month rent increase if you are actually below market now. Give notice a month or so after you close according to your state's laws and after you have a better chance to evaluate your tenant's performance. If it takes the kind of improvements you outlined to raise the rent $50 on a $700 unit, I question whether you are really below the market.

In general, you can not carry over the expenses to next year unless they are capital expenditures that are depreciable or amortizeable. If you began working as a real estate agent seeking to produce profit, you may be able to deduct start up expenses and other ordinary and reasonable expenses of operating on Schedule C. This is a situation where you would benefit from a professionally prepared return.

1250 gain is essentially recapturing depreciation but it is only recaptured to the extent of gain on the sale. As already pointed out, if all the settlement costs are additions to basis, your gain is only about $400 generating a maximum tax of 25% of the recaptured 1250 gain or $100. Gain is defined as net sale proceeds less adjusted basis. You don't recapture all the depreciation as assumed above.

Check the size, spacing and span of the floor joists to make sure they will support the floor with small enough deflection to support tile without cracking. There are deflection calculators on the web, just Google it. I would seriously consider putting down a vapor barrier, 3/4" plywood, a vapor barrier and LVP. If you still want to do ceramic tile, you may try planing and sanding subfloor as level as possible, screwing the subfloor to the joists, then thinset and screw down 1/2" cement board, then water proof membrane, then tile.

A local experienced real estate attorney will already have a lease they like and that complies with local law on their word processor. It would cost more for them to revise an internet lease that you bring in to them. Call a couple and ask about pricing.

I think you would confuse things if you paid rent for your personal unit. The general idea is to separate the expenses between the personal unit and the rental. If the expenditure is only for your personal unit, then pay for it with your personal accounts. Allocate expenditures that are for both units one half each. Pay for expenditures that are only for the rental unit from rental funds. Your proposed method should work.

@Kyle Howard No