Condo – sell or rent out?

[4plexowner]

Bloat – are you saying that 2008 can take his entire $2K/mo loss as a writeoff? ($2K/mo loss * 27%ish tax bracket = $500/mo tax savings?)

I don’t think that is correct

As a rental the condo’s expenses, depreciation and income go onto Schedule E not Schedule A – the benefits from negative income on Schedule E are significantly less than the same deduction on Schedule A – and, as I pointed out in another thread, if you have W-2 income that puts you into AMT territory the tax benefits from losses on Schedule E are reduced even more because the bennies from Sched E are offset by increases in AMT

I’ll say it once again: be VERY conservative when making buy/sell decisions based on expected tax bennies – if the deal really hinges on the tax considerations go to a CPA and work through some real numbers

[Raybyrnes]

djrobsd

As a follow up “My suggestion, which actually comes from sdrealtor, is to sit down and make a spreadsheet, and figure out ALL your options and the costs associated with those options. You can bang your head against all the wall all you want, but once you put it all down on paper, it makes it much easier to see what the best thing to do.

If you are going to create a spreadsheet determine what path you re going to take before you put the spread sheet together. By this I mean if out come x exceeds outcome y then I sell. If on the other hand the data is the opposite then I will hold tight.

Too often you can put a spreadsheet together and it is an excercise of futility of you don’t use the data to give you the best possible outcome. If the oucome doesn’t conform to the way you feel it is easy to ratiionale away the outcome or to modify the data set to support your initial feelings.

[Raybyrnes]

djrobsd

As a follow up “My suggestion, which actually comes from sdrealtor, is to sit down and make a spreadsheet, and figure out ALL your options and the costs associated with those options. You can bang your head against all the wall all you want, but once you put it all down on paper, it makes it much easier to see what the best thing to do.

If you are going to create a spreadsheet determine what path you re going to take before you put the spread sheet together. By this I mean if out come x exceeds outcome y then I sell. If on the other hand the data is the opposite then I will hold tight.

Too often you can put a spreadsheet together and it is an excercise of futility of you don’t use the data to give you the best possible outcome. If the oucome doesn’t conform to the way you feel it is easy to ratiionale away the outcome or to modify the data set to support your initial feelings.

[Raybyrnes]

djrobsd

As a follow up “My suggestion, which actually comes from sdrealtor, is to sit down and make a spreadsheet, and figure out ALL your options and the costs associated with those options. You can bang your head against all the wall all you want, but once you put it all down on paper, it makes it much easier to see what the best thing to do.

If you are going to create a spreadsheet determine what path you re going to take before you put the spread sheet together. By this I mean if out come x exceeds outcome y then I sell. If on the other hand the data is the opposite then I will hold tight.

Too often you can put a spreadsheet together and it is an excercise of futility of you don’t use the data to give you the best possible outcome. If the oucome doesn’t conform to the way you feel it is easy to ratiionale away the outcome or to modify the data set to support your initial feelings.

[Bloat]

I believe up to a $25k Schedule E loss carries to the 1040 if income is below $100k, and 50% is allowed between $100k and $150k. Wasn’t 2008’s income $90k?

I am a CPA with a couple of long held rentals on my Schedule E with a tiny loss that I don’t get to write off due to income. I’m rusty on the tax stuff, in fact I avoid it, so best to verify with a CPA who knows more than I.

To 2008, I say run a spreadsheet on it, get it confirmed by an accountant. If you use tax software (TurboTax, etc) run some estimates through the schedule E and see how it plays to the bottom line.

[Bloat]

I believe up to a $25k Schedule E loss carries to the 1040 if income is below $100k, and 50% is allowed between $100k and $150k. Wasn’t 2008’s income $90k?

I am a CPA with a couple of long held rentals on my Schedule E with a tiny loss that I don’t get to write off due to income. I’m rusty on the tax stuff, in fact I avoid it, so best to verify with a CPA who knows more than I.

To 2008, I say run a spreadsheet on it, get it confirmed by an accountant. If you use tax software (TurboTax, etc) run some estimates through the schedule E and see how it plays to the bottom line.

[Bloat]

I believe up to a $25k Schedule E loss carries to the 1040 if income is below $100k, and 50% is allowed between $100k and $150k. Wasn’t 2008’s income $90k?

I am a CPA with a couple of long held rentals on my Schedule E with a tiny loss that I don’t get to write off due to income. I’m rusty on the tax stuff, in fact I avoid it, so best to verify with a CPA who knows more than I.

To 2008, I say run a spreadsheet on it, get it confirmed by an accountant. If you use tax software (TurboTax, etc) run some estimates through the schedule E and see how it plays to the bottom line.

[4plexowner]

Bloat – I am probably basing my comments on having exceeded the $25K limit on losses (does ‘negative income’ sound any better?) – I was carrying some pretty hefty negative cashflow some years (what in the world was I thinking?)

[4plexowner]

Bloat – I am probably basing my comments on having exceeded the $25K limit on losses (does ‘negative income’ sound any better?) – I was carrying some pretty hefty negative cashflow some years (what in the world was I thinking?)

[4plexowner]

Bloat – I am probably basing my comments on having exceeded the $25K limit on losses (does ‘negative income’ sound any better?) – I was carrying some pretty hefty negative cashflow some years (what in the world was I thinking?)

[PorkmanDelardo]

I say ignore the pundits and walk away like all the other yahoos. What’s done is done. and you are well done, my friend. Burnt toast.
I post foreclosure notices all over the county. I will keep my eyes open for your notice and post with a sad thought in mind for you. I am not totally without empathy. Don’t shoot the messenger. However, I am a realist. You can survive a foreclosure and the bad credit that goes with it. Soon enough you will be able to jump back into the market, when prices are more reasonable and more experience under your belt. I feel your pain. Don’t prolong the agony. Porkman

[PorkmanDelardo]

I say ignore the pundits and walk away like all the other yahoos. What’s done is done. and you are well done, my friend. Burnt toast.
I post foreclosure notices all over the county. I will keep my eyes open for your notice and post with a sad thought in mind for you. I am not totally without empathy. Don’t shoot the messenger. However, I am a realist. You can survive a foreclosure and the bad credit that goes with it. Soon enough you will be able to jump back into the market, when prices are more reasonable and more experience under your belt. I feel your pain. Don’t prolong the agony. Porkman

[PorkmanDelardo]

I say ignore the pundits and walk away like all the other yahoos. What’s done is done. and you are well done, my friend. Burnt toast.
I post foreclosure notices all over the county. I will keep my eyes open for your notice and post with a sad thought in mind for you. I am not totally without empathy. Don’t shoot the messenger. However, I am a realist. You can survive a foreclosure and the bad credit that goes with it. Soon enough you will be able to jump back into the market, when prices are more reasonable and more experience under your belt. I feel your pain. Don’t prolong the agony. Porkman

[4plexowner]

2008 – are you familiar with rent-to-own?

Google “Residential Lease with Option to Purchase” and “Rent To Own” and you will find plenty of stuff to look at

I’ve considered doing a rent-to-own but I never had to – I say ‘had to’ because I consider rent-to-own as a last ditch effort and not really a win-win situation in most cases

From what I’ve read only 20% of rent-to-own situations result in a purchase. The other 80% result in a tenant who, for whatever reason, doesn’t purchase the property and loses any benefits the option to purchase entitled him to.

In this market I think the odds of a rent-to-own resulting in a purchase are even less than 20/80 so what might you gain by doing this?

You get a higher rent – the rent-to-own tenant pays an above-market rate with the agreement that some of that money will be applied as down payment towards the purchase of the condo

Your tenant takes better care of your place because they think they will ultimately own it

At the end of the option period (two years? three?) you still own the condo but have to deal with a frustrated (and angry?) tenant.

[4plexowner]

2008 – are you familiar with rent-to-own?

Google “Residential Lease with Option to Purchase” and “Rent To Own” and you will find plenty of stuff to look at

I’ve considered doing a rent-to-own but I never had to – I say ‘had to’ because I consider rent-to-own as a last ditch effort and not really a win-win situation in most cases

From what I’ve read only 20% of rent-to-own situations result in a purchase. The other 80% result in a tenant who, for whatever reason, doesn’t purchase the property and loses any benefits the option to purchase entitled him to.

In this market I think the odds of a rent-to-own resulting in a purchase are even less than 20/80 so what might you gain by doing this?

You get a higher rent – the rent-to-own tenant pays an above-market rate with the agreement that some of that money will be applied as down payment towards the purchase of the condo

Your tenant takes better care of your place because they think they will ultimately own it

At the end of the option period (two years? three?) you still own the condo but have to deal with a frustrated (and angry?) tenant.

[Author]

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