All Forum Posts by: Wilson Churchill

 Yes... Lower prices and low interest rates, please!

Just wait until interest rates start rising..

When investing for cash flow, it makes sense to only buy at a particular cap rate. But the cap rate can change with a discounted purchase. It isn't necessary to wait until market prices approach the cap rate you desire if you can still find individual deals that meet your criteria.

So there will no longer be a 20 day "first look" period for owner occupants?

Treat any affected areas with a pet odor remover like Nature's Miracle. I would definitely spray along the baseboards and even mop the walls, if necessary.

I now have the rent due on the first with no grace period. The late fee is due on the second and I serve the (7 day) notice on the second including the late fee.

There are some tax differences between LLCs, Partnerships, and S-Corporations. With S-Corporations, shareholders don't get debt basis for any debts that the corporation takes on, other than personal debt that the corporation owes directly to the shareholder:

http://www3.cbiz.com/page.asp?pid=8632

Oh yeah, and the deduction is limited to net investment income:

Generally, your deduction for investment interest expense is limited to your net investment income.

You can carry over the amount of investment interest you could not deduct because of this limit to the next tax year. The interest carried over is treated as investment interest paid or accrued in that next year.

You can carry over disallowed investment interest to the next tax year even if it is more than your taxable income in the year the interest was paid or accrued.

 You are right. I was looking at investment expenses. Most of the time Schedule E will be better, anyways.

 Publication 550 says the same regarding investment interest:

If you borrow money to buy property you hold for investment, the interest you pay is investment interest. You can deduct investment interest subject to the limit discussed later. However, you cannot deduct interest you incurred to produce tax-exempt income. See Tax-exempt income under Nondeductible Expenses, later. You also cannot deduct interest expenses on straddles discussed under Interest expense and carrying charges on straddles , later.

Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity.

Passive activity. A passive activity generally is any activity involving the conduct of any trade or business in which you do not materially participate and any rental activity. However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true.

• More than one-half of the personal services you perform during the year in all trades or businesses are performed in real property trades or businesses in which you materially participate.
• You perform more than 750 hours of services during the year in real property trades or businesses in which you materially participate.

http://www.irs.gov/publications/p550/ch03.html#en_US_2013_publink100010203

The deduction for investment expense is limited by a 2% of AGI floor. There is no such limitation for Schedule E. You may be able to deduct a rental loss against ordinary income if you qualify for the special allowance. Also, if you look at the instructions for Schedule A, Line 14, it states that investment interest does not include any interest allocable to passive activities. Without reading the regulations, I assume this would not be allowed:

"

Line 14
Investment Interest
Investment interest is interest paid on
money you borrowed that is allocable to
property held for investment. It does not
include any interest allocable to passive
activities or to securities that generate
tax-exempt income."

http://www.irs.gov/pub/irs-pdf/i1040sca.pdf