Disclaimer: This article was initially written for Texas investors. Since business entities are regulated by state law, there are some differences between the states. This is especially true for LLCs – Limited Liability Companies and LPs – Limited Partnerships. Before making your final decision, please consult professionals with the knowledge of your state law. Which …
Some people simply enjoy self-torture. They do their own taxes. If you are one of them and you never heard of “depreciation recapture” – it’s time to get an accountant. If you already have an accountant and she never discussed “depreciation recapture” with you – you need a new accountant. Either way, it’s a good …
Any real estate investor is happy when the value of his property goes up. The flip side of that growth is taxes, known as capital gains taxes. Let’s look at a simplistic example. If you originally bought a property for $100,000 and later sold it for $160,000, you made $60,000 on the deal. The IRS …
Capital Gain Taxes – The Big Bad Wolf for Investors Read More »
Of course, repairs! Why bother with some technicalities? Because if you don’t, the IRS will. Everything you spend to fix the real property is classified is either repairs or improvements. The cost of repairs is a current year expense, fully deductible. The cost of improvements is a capital expenditure, only partially deductible through depreciation. Let’s look …
A few years ago, investors loved foreclosures: it was an opportunity to buy cheap. Today, investors themselves are getting foreclosed on. As always, the IRS is making things worse. Whether you are buying foreclosures or being foreclosed – you need to know the IRS rules. 1. Foreclosure is a sale. You give up the house, …
This call comes almost weekly: Michael, I just sold this house for $110,000 and my mortgage was only $100,000, but I did not actually make $10,000 – they gave me a check for only $4,000 after all these stupid fees. Do I really have to pay taxes on the entire $10,000 or just on the …
Having a teenager in the house is an experience – a learning experience. Here is what I learned the other day: when a kid walks into a store and then walks away with some items that he, let’s say, neglected to pay for – there is a term for his activity. And it’s not what …
Not for the IRS, anyway. But before we turn attention to the almighty IRS, let me share some mean-spirited general comments. Ten years ago, the title “real estate investor” actually had some meaning and respect, and it almost had to be earned. Like, for instance, you would have to complete couple deals before calling yourself …
If you think the home office tax deduction is confusing – you are right. Worse, the IRS has reversed its own position from yes to no and back to yes several times – like the infamous Florida recounts. Let’s briefly review the rules as they are today. 1. You need to have a legitimate business that …
Except for you, of course. But THEY sure cheat the IRS, we know it for a fact. How do we know? Well, they brag non-stop about paying zero taxes. How is this possible, unless they cheat? Maybe they do, and maybe they don’t. Interestingly, there is a third option: maybe, they do not mean to cheat …
