[roastbeef]

Originally Posted by DETRoadster

New plan is to buy a house that fits our evolving needs and give the economy some time to cool. Wait for the next recession to hit, then pounce and scoop up and small, easily rentable, property that we have no emotional investment in. Oh, and hire a property management company to take care of the dirty details we don't want to be bothered with!

also, while we're talking about recessions- i think dave ramsey hits a bullseye here.

secondary to that, be cautious of people giving advice on things they aren't involved in. i've had multiple friends/family give [unsolicited] advice on investing, real estate, etc., and they are broke or not involved in the subject at all. people are quick to share their fears and causes for inaction with others. if i had listened to some people, i would not be in the position i am in today.

[NEfan508]

Wow so many big ballers here, OP is renting out his house not becoming a realestate investor

some on here hate the liability of life, if this happens or if that happens, yes you could get really financially fu**ed but I don't think you will, just be careful with finding 1 good tenet that's it

I'm small potato's here, in Boston/Cambridge/Somerville, forget the students go for the same sex couples! fat same sex is my target, I have a few triple deckers and some single family's all priced a few hundred under market value

I was in FL one recent Christmas, a renter called me about a lightbulb out in the common area hallway, ok I'm 1500 miles away, I said go in the basement I have a box with a few spares, the MF refused saying it's not her job and she is holding the rent until it's replaced ?!?!? Are you fucking kidding me? College student...

It's illegal to discriminate so be careful, city sometimes will call and test you, I discriminate not by color or sex BUT by kids, I personally have twin girls and a boy, I'm fully aware I have animal children (they break everything)

Most on here are giving great advice "big ballers" but it's overkill in your case imo, put it on Facebook/Craigslist for rent, Go to your bank for the necessary paperwork (proper state lease agreements) also any landlord is required to keep a tenant's security deposit in a separate, interest-bearing bank account (escrow) in Massachusetts.

Off topic, your bank does notary and has other valuable paperwork available to its customers like bill of sales blank PDFs for your boat, RV and or vehicle specific to your state (nothing off the shelf from online) worth a call to your branch, your already a customer use what's available to you

[jwzimm]

Another topic some folks don't consider is Capital Gains tax. You are allowed an exemption of $250k (or $500k if married) which you can shield from the Cap Gains tax when you sell your primary residence. The key here is how that is defined. The IRS defines your primary residence as a home you have lived in for 2 of the last 5 years (non-consecutively). What that boils down to is you are able to rent out your house for up to 3 years and still be able to shield the proceeds from a sale from the Capital Gains tax. If you do not sell it prior to 3 years after moving out of the property (to the day) you will be liable to pay Capital Gain tax on 100% of the proceeds.

One exception to this rule is the like-kind exchange whereby you can shield those proceeds provided you reinvest them immediately into a like-kind investment. The catch is, you would be required to invest them into another rental property. You cannot use them for the purchase of a private residence.

Another factor is depreciation of the rental property. When you do your taxes the rental income is counted as taxable income. You can usually offset a good portion of this income by claiming the depreciation of the home (a total non-sequitor as homes usually increase in value but that is the IRS for you). The big "gotcha" is that you will be liable to pay the taxes on all of the depreciation that was able to be claimed against an investment property when you sell it. That is true even if you did not claim the depreciation in previous years taxes. That means there is zero sense in not claiming the depreciation of the asset.

In any case, I highly recommend you speak with an accountant about this unless you feel you have a good grasp of all of the implications. I did a fair amount of research and have a pretty good idea of the tax stuff but I still opted to get a tax accountant for this.

[Run Silent]

Originally Posted by jwzimm

Another topic some folks don't consider is Capital Gains tax. You are allowed an exemption of $250k (or $500k if married) which you can shield from the Cap Gains tax when you sell your primary residence. The key here is how that is defined. The IRS defines your primary residence as a home you have lived in for 2 of the last 5 years (non-consecutively). What that boils down to is you are able to rent out your house for up to 3 years and still be able to shield the proceeds from a sale from the Capital Gains tax. If you do not sell it prior to 3 years after moving out of the property (to the day) you will be liable to pay Capital Gain tax on 100% of the proceeds.

One exception to this rule is the like-kind exchange whereby you can shield those proceeds provided you reinvest them immediately into a like-kind investment. The catch is, you would be required to invest them into another rental property. You cannot use them for the purchase of a private residence.

Another factor is depreciation of the rental property. When you do your taxes the rental income is counted as taxable income. You can usually offset a good portion of this income by claiming the depreciation of the home (a total non-sequitor as homes usually increase in value but that is the IRS for you).

This is mostly true. The LTCG exemption is actually quite a bit higher than those numbers, since you can also subtract your full cost basis in the property from the sales price. Your cost basis is calculated by starting with the price you paid for the home, and then adding purchase expenses (e.g., closing costs, title insurance, and any settlement fees).

To this figure, you can add the cost of any additions and improvements you made that had a useful life of over one year. Finally, add your selling costs, like real estate agent commissions and attorney fees, as well as any transfer taxes you incurred.

Originally Posted by jwzimm

The big "gotcha" is that you will be liable to pay the taxes on all of the depreciation that was able to be claimed against an investment property when you sell it. That is true even if you did not claim the depreciation in previous years taxes. That means there is zero sense in not claiming the depreciation of the asset.

This is not true. You will not have to pay an taxes on depreciation you did not elect in prior years. I'm not sure where you got this information. Here are the particulars if interested. I am a certified public accountant. While I agree that depreciation recapture is going to be assessed by the taxing authority at time of sale, the IRS provides a lookback clause in that you can amend previous returns to offset the recapture provisions in order to not have to pay taxes you don't owe. So basically, you pay the taxes and then get them refunded via amended returns. Not a smart move, but you won't be taxed on un-taken depreciation.

https://www.irs.gov/pub/irs-pdf/p527.pdf

https://www.irs.gov/pub/irs-pdf/p946.pdf

[jwzimm]

Originally Posted by Run Silent

This is mostly true. The LTCG exemption is actually quite a bit higher than those numbers, since you can also subtract your full cost basis in the property from the sales price. Your cost basis is calculated by starting with the price you paid for the home, and then adding purchase expenses (e.g., closing costs, title insurance, and any settlement fees).

To this figure, you can add the cost of any additions and improvements you made that had a useful life of over one year. Finally, add your selling costs, like real estate agent commissions and attorney fees, as well as any transfer taxes you incurred.



This is not true. You will not have to pay an taxes on depreciation you did not elect in prior years. I'm not sure where you got this information. Here are the particulars if interested. I am a certified public accountant. While I agree that depreciation recapture is going to be assessed by the taxing authority at time of sale, the IRS provides a lookback clause in that you can amend previous returns to offset the recapture provisions in order to not have to pay taxes you don't owe. So basically, you pay the taxes and then get them refunded via amended returns. Not a smart move, but you won't be taxed on un-taken depreciation.

https://www.irs.gov/pub/irs-pdf/p527.pdf

https://www.irs.gov/pub/irs-pdf/p946.pdf

Thanks for the clarifications. I did know about the first part. That is why I stated you would be subject to Cap Gains on the proceeds of the sale. I guess I did gloss over that the proceeds of the sale do not equal the sale price but rather the amount of money "gained" during your ownership of the property.

As for the second point, I do see your point. Basically, if you do not claim the depreciation you are entitled to during your period of ownership/rental you will need to file amended returns for those years when you prepare your taxes in the year following the sale. As you said, not advisable.

Bottom line, hire a CPA and get their advice.

[UncleWede]

Originally Posted by jwzimm

Bottom line, hire a CPA and get their advice.

Just not one that drives a Mustang with "those horses" on the emblem

[lsturbointeg]

I'll be honest...I've never met a landlord I liked. They all seemed to be a-holes, never fixed anything and they all seemed to hate their life. Anyways, GL!

[NEFARIOUS]

Didn't really read the other replies, but just do yourself a favor, learn from my failure and get a background check...

In my heyday I never used to have problems with roommates when they rented my spare rooms so I didn't think much of it, but the final time is where I learned my lesson: The guy seemed cool at first, and since his dad was paying the whole thing by Venmo, I don't have to worry about him squandering his rent on something stupid (like what happened with a friend whose roommate celebrated 4/20 buying a shitload of nugs first and tried asking for forgiveness later).

However, although it's a long, sad story of a misunderstanding going horribly wrong, he didn't tell me about being on parole, so it was "fun" having random inspections by the cops every few weeks. However, he got nabbed for speeding on his bike and they detained him, which although he was released the next morning, it resurfaced his PTSD of the horrible shit he saw in the slammer and he started drinking like a fish...

The apartment was in disarray (I'm a neat freak, so this pissed me off... I'm the type doesn't leave the house without making my bed and cleans the house from top to bottom every Sunday afternoon), some things got broken, and he even raided my liquor cache; I don't know whether to be impressed or livid that WITHIN ONE WEEK (as in I had a rum+Coke one Friday and it was all gone the next), he polished off a 5th of Stoli, Patrón, Sailor Jerry, a Macallan 18 I got as a birthday gift in my heyday, and even motherfucking Asian cooking wine in the pantry (Although it's awesome with certain Asian dishes, I tried just a spoonful of it on its own while making steamed fish and it was nasty AF).

Had I known his record, I definitely would've not taken him in.

[FuriouslyFast]

[adobeee]

become a member of a landlord-focused housing association (ie https://www.ebrha.com/). they provide tips and also rental agreements that are very friendly to landlords that you can have new tenants sign. obviously i trust your judgement to do basic background checks, employment verification etc.