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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Lan Mandragoran on June 27, 2017, 07:52:50 AM

Title: Experiences with taxes in real estate
Post by: Lan Mandragoran on June 27, 2017, 07:52:50 AM
This could go in the taxes section... but I'd rather ask people who own real-estate.

My wife and I will filling taxes for some properties and was just kind of wondering what peoples averages experiences with that looked like.  I guess I mean, I know depreciation and various small projects and upkeep will be deductible and I don't anticipate paying alot of taxes on it, but what do those percentages usually look for you all :).
Title: Re: Experiences with taxes in real estate
Post by: Cwadda on June 27, 2017, 08:46:43 AM
My tax bill is $6900 annually on a 4 family worth $350k. Includes water and sewer. I write off 3/4 of the tax bill because I occupy one of the units.
Title: Re: Experiences with taxes in real estate
Post by: CareCPA on June 27, 2017, 04:42:39 PM
I think you guys are talking about two different kinds of taxes. I assumed OP meant income taxes, Cwadda appears to be talking about property taxes?

What specifically are you looking for? Average net profit percentages? Repairs and maintenance vs rents? Give us some direction here.
Title: Re: Experiences with taxes in real estate
Post by: MommyCake on June 28, 2017, 04:47:19 AM
Your taxes on rental income will be based off your adjusted income.  Your total income (salary, rent, whatever) minus deductions (health care costs, mortgage interest, maintenance, whatever) will put you in a certain tax bracket.  I think I paid 18% taxes for 2016. 
Title: Re: Experiences with taxes in real estate
Post by: matchewed on June 28, 2017, 07:19:08 AM
This could go in the taxes section... but I'd rather ask people who own real-estate.

My wife and I will filling taxes for some properties and was just kind of wondering what peoples averages experiences with that looked like.  I guess I mean, I know depreciation and various small projects and upkeep will be deductible and I don't anticipate paying alot of taxes on it, but what do those percentages usually look for you all :).

When you ask what those percentages look like what do you mean?
Title: Re: Experiences with taxes in real estate
Post by: Lan Mandragoran on June 28, 2017, 07:30:32 AM
Sorry should have been more clear. I was talking about income taxes.  I know a good portion of that ends up getting written off or used with various other real estate tax benefits so I was just wondering what kind of income taxes people ended up paying on their "income". 

Taxes on real estate seem much different to me than a w2 job, just because of the fact that such a huge precentage of it (~50%gross+financing ) gets eaten by expenses.
Title: Re: Experiences with taxes in real estate
Post by: MaikoTsumi on June 28, 2017, 07:43:05 AM
At the end of this year, I will have 8-9 properties.  Avg. cash flow is between $3300-$5000 per year, per property.  I currently make too much to deduct for expenses, so all my expenses and depreciation goes into the capital loss carryover bucket.  I will pay zero income taxes this year on my cash flow and will continue to accumulate capital loss carryover to offset future earnings.  I don't expect to pay income taxes on cash flow for another 3-4 years, and only a modest increase in taxes until 10-15 years out where my overall tax rate will drop since I'll be living on the cash flow by then.
Title: Re: Experiences with taxes in real estate
Post by: ben.soutas on June 28, 2017, 09:46:25 AM
If you are also wondering what tax deductions are available as you finish up your filing, you can find a good list at this link: https://www.rentler.com/resources/2016/10/29/what-tax-deductions-are-available-to-landlords/ (https://www.rentler.com/resources/2016/10/29/what-tax-deductions-are-available-to-landlords/)

It talks about repairs, insurance, and advertising among others.
Title: Re: Experiences with taxes in real estate
Post by: SeattleCPA on June 28, 2017, 10:23:04 AM
At the end of this year, I will have 8-9 properties.  Avg. cash flow is between $3300-$5000 per year, per property.  I currently make too much to deduct for expenses, so all my expenses and depreciation goes into the capital loss carryover bucket.  I will pay zero income taxes this year on my cash flow and will continue to accumulate capital loss carryover to offset future earnings.  I don't expect to pay income taxes on cash flow for another 3-4 years, and only a modest increase in taxes until 10-15 years out where my overall tax rate will drop since I'll be living on the cash flow by then.

The losses are not capital loss carryovers... they're passive losses that get carried forward. Importance difference.
Title: Re: Experiences with taxes in real estate
Post by: SeattleCPA on June 28, 2017, 10:24:32 AM
This could go in the taxes section... but I'd rather ask people who own real-estate.

My wife and I will filling taxes for some properties and was just kind of wondering what peoples averages experiences with that looked like.  I guess I mean, I know depreciation and various small projects and upkeep will be deductible and I don't anticipate paying alot of taxes on it, but what do those percentages usually look for you all :).

You probably won't pay any income taxes on your real estate... and in fact the paper losses on your real estate (from depreciation) may shelter earned income and mean that you won't pay much income taxes on your earned income either...
Title: Re: Experiences with taxes in real estate
Post by: MommyCake on June 28, 2017, 01:49:40 PM

[/quote]

You probably won't pay any income taxes on your real estate... and in fact the paper losses on your real estate (from depreciation) may shelter earned income and mean that you won't pay much income taxes on your earned income either...
[/quote]

Seattle maybe I should be hiring you to do my taxes next year...
Title: Re: Experiences with taxes in real estate
Post by: Lan Mandragoran on June 29, 2017, 08:44:29 AM
Hmm thanks for the responses :). Still not sure lol, guess i'll find out.
Title: Re: Experiences with taxes in real estate
Post by: clarkfan1979 on June 29, 2017, 10:21:16 AM
My main residence is in Hawaii and I have a rental in Colorado and Florida near family. I make at least two trips a year to each location to visit family and manage the property. The travel write-off is huge for me.

I think our federal tax rate averages around 11%. If we didn't have the rentals, it would probably be 13% to 15%.
Title: Re: Experiences with taxes in real estate
Post by: Cwadda on September 27, 2017, 02:22:07 PM


Be careful about low post count, necro-bumping, and sharing links which quite overtly promote services.
Title: Re: Experiences with taxes in real estate
Post by: Dicey on September 29, 2017, 06:21:43 AM
Hmmm, it looks like jkynor_TT has left the building. Looks like your succinct warning worked. If you modify your post to eliminate that link, there should be no trace of them on this thread. Thanks, Cwadda!
Title: Re: Experiences with taxes in real estate
Post by: Cwadda on September 29, 2017, 07:05:04 AM
Hmmm, it looks like jkynor_TT has left the building. Looks like your succinct warning worked. If you modify your post to eliminate that link, there should be no trace of them on this thread. Thanks, Cwadda!

Boom, done.