[Coronita]

[quote=dumbrenter][quote=EconProf]
Actually, no. I just agreed with him that for really higher income folks–above $250k or so–some tax benefits start to phase out. Also, some additional taxes start to apply…part of Obamacare, I believe. In recent years at the CA and Fed level, higher effective marginal tax rates for the rich have been going into effect via slight-of-hand. Some of these new rules will apply to rental property owners, but only very high income taxpayers.
But for the vast majority of Piggs reading this, rental “losses” are used to offset W-2 income, thus lessening the tax liability.[/quote]

Are you sure that folks with > 150K AGI can still get the benefit of offsetting the rental “losses”? And they don’t have to be a full-time real estate professional to get the depreciation losses?
I hope you are right, but this is a good time for me to go check on the IRS site.[/quote]

If your AGI is >$150k, you cannot offset use your rental losses to offset your W2 income if you are not considered a real estate professional…The only benefit is you can zero out your rental incomes if you have more than one property.

For folks above $250k, you get hit with other things both at the federal and state levels (not related to rental income alone) but with taxes related to income in general… (The state threshold is $340k if your are claiming head of household)…
Namely,

1) Medicare tax surcharge on unearned investment income (3.8%) for AGI’s above $200k(single/HOH) and $250k(joint). This applies to stock, index, real estate,etc… The exception is the first $250k/500k capital gains exemption from the sales of a primary home is not subject to this surcharge…

2)Capital gains taxes of 20% on AGI above $400k/$450k…

3)The expiration of the holiday tax credit (which applies to everyone) (insignificant for upper income people)

4)California tax increases for folks above $250k single ($340k HOH) $500k for joint -> 10.3% effective tax rate, and 11.3% and 12.3% brackets thereafter…

[quote]
But for the vast majority of Piggs reading this, rental “losses” are used to offset W-2 income, thus lessening the tax liability.[/quote]

I think EP was referring to the majority of piggs don’t reach the $150k AGI threshold… Whether this is true or not is a separate topic of discussion.

These are the general rules for most common people. I’m sure there’s probably other exceptions, if you have more variables to work with (retirement etc). But it probably applies to most people working and earning a W2 or 1099….

What I do think is the case is all else being equal, earned income for amount up to a threshold Y is taxed at a significantly higher rate than if the same income Y is earned from dividends and/or long term capital gains… What threshold Y is is left as an exercise for the reader…

And one more reason why my original statement that W2 is the worst way to accumulate wealth, all else being equal…

[Coronita]

[quote=skerzz]The majority of W-2 workers that own rental property in California generally will not benefit from depreciation deductions (losses on rental properties). I won’t go into all the specifics, but unless you are a full time real estate professional you won’t be able to offset ordinary income with passive rental losses. There is an exception to this rule based on income limitations — however, those that own rentals in SoCal or the Bay Area are likely making too much money to realize the benefit.[/quote]

Ding ding ding…..

BUT, I think it does mean you can almost get into a situation in which your effective rental income is $0/year at least on paper in the short/mid term until you actually need to deal with it… It does end up coming back and biting your eventually.. but hopefully by that time, you have little/no W2 income so you’re in a lower bracket at that point and/or you’re dead by then. Or you keep rolling and rolling it over…

At least that’s my plan (hopefully not the dead part)…

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[quote=AN][quote=EconProf][quote=skerzz]The majority of W-2 workers that own rental property in California generally will not benefit from depreciation deductions (losses on rental properties). I won’t go into all the specifics, but unless you are a full time real estate professional you won’t be able to offset ordinary income with passive rental losses. There is an exception to this rule based on income limitations — however, those that own rentals in SoCal or the Bay Area are likely making too much money to realize the benefit.[/quote]
Please explain yourself here. A W-2 worker is exactly the taxpayer who can most use the depreciation “expense” that goes with owning rental real estate. While he may have a positive cash flow from rents minus cash expenses, he also gets to deduct depreciation “expense” every year. This lowers the property’s taxable income, maybe even making it negative for tax purposes. The result is lower total taxable income. In fact, the higher his W-2 taxable income, the greater the tax benefit from owning rental properties.[/quote]skerzz is partially correct. You can benefit from depreciation deduction, just like everyone else, but the amount you can deduct decreases when you make >$150k. After $150k AGI, you can no longer apply passive loss from rental property toward your active W-2 income. So, if you make $145k and have $50k “loss” in investment property, your new AGI would be $95k. However, if you make $155k, you cannot apply the $50k “loss” toward your active W-2 income. Unless you’re a real estate professional.

This is another prime example of social engineering. If you’re a couple and one of you make close to $150k, there’s very little reason for the other person to go back to work, especially if you have a few investment properties that net a huge “loss”. It would only make sense for the other spouse to go back to work if the other spouse becomes a real estate agent/broker.[/quote]

Bingo..

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[quote=AN][quote=flu]I’m sure part of the reason why this is effed up is because I’m in a triple boot environment between OSX, Linux, Windows 8 from a mac mini server that’s running dual SSD’s.[/quote]Why oh why would you want to do triple boot AND store your data on the same disk? All my pix/vids/etc (stuff that are priceless) sits on a RAID 10 external enclosure attached to my media server and being real time backed up to backblaze.com. That way, if the OS ever eff up or my hardware fail, I will never lose my priceless data and just re-install the OS. Also, triple booting on the same HDD is just asking for trouble IMHO. Why not get 3 mac mini to boot 3 different OS. They’re not that expensive and doesn’t take that much space.[/quote]

I wanted 1 computer to carry around, and something not bulky like a laptop… It’s not the money, it’s the convenience. I guess apparently not really convenient when your down.

Also the way the latest OSX works, you’re only allowed 4 partitions on the first drive, where one of the partitions is a mac recovery partition.

Windows also doesn’t boot from the second drive. At least I couldn’t get it to work awhile ago..

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[quote=spdrun]

I did a little experimentation and I’ve noticed starting with windows 8, after some use, I can’t mount the same partition when I’m booted into linux. And if I run the usual tools from linux to fix the NTFS file system, itcan’t… Then when I boot back into windows, it does attempts to do a disk recovery that ends up messing up the partition. That, or I’m going insane…

Are your two SSDs RAIDed or individual? Are you sure you’re not suffering garden-variety data corruption due to a bad SSD, controller, driver, or RAM?

Occam’s Razor — I’d test the hardware thoroughly before trusting the box again.[/quote]

The SSDs are fine…Also tried with regular drives, same problem seems to happen… Maybe windows 8 isn’t playing nice with EFI + MBR hybrid

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[quote=AN]Unfortunately flu, you’re SOL, since you have an upgrade license. Why didn’t you buy a full version back then? It was only ~$20-40 back when it first came out. Full version would let you do both upgrade and full install. But to fix your problem, I have Windows 7 CD you can install, then immediate upgrade to Windows 8 if you want.[/quote]

Because I was stupid….

Anyway, I did find out that installing windows 8 without entering a key, and then doing an in place upgrade from the same installation using an upgrade key works… I actually found the information from vwware’s website, because they recommend rather than trying to upgrade from a virtualized windows7 to windows8 upgrade, just do a fresh install of windows8…

Glad that worked. Otherwise I would have had to go searching for my *cough* windows vista CD’s….

It’s funny. No matter how proactive I try in backing shit up, and having failover. Somewhere along the line, something new always happens…..

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[quote=ucodegen]Umm.. flu, you should have used Linux to image the drive when you did the ‘upgrade’. This way if it craps out, you can restore the image. Best to do one right before the upgrade and one right after. The Linux imaging tools only backup/archive used blocks and leave the freelist alone.

You can use a CD/DVD based Linux bootable to do it, writing the image to a removable USB drive (or visa versa).[/quote]

The upgrade went fine. After about 4-5 days of use, is where it crapped out. I’ve had failures with windows before, but I’ve never had the auto-recovery actually wipe files out of the same partition beyond the windows folder… So it’s kinda strange to me… My personal files (pix/videos/etc) was on a different folder on the same partition, and it’s gone. I do have a backup of it, it’s just a major pain to restore.

I didn’t have much time to poke around with windows 8/8.1 But something is different about the way it does recovery in NTFS partitions….

I didn’t think I needed to really backup the entire partition since for the most part I rarely use windows and the worst case would be just to reinstall the O/S…. At this point, I booted into linux and just ran DD on the partition to duplicate into another drive…Now I get to run a bunch of undelete tools to see if it recovers anything that might not have been backed up…. I think I lost maybe about 4-5 days of stuff, which might have been my 2013 taxes that I started. Oh well..

I did a little experimentation and I’ve noticed starting with windows 8, after some use, I can’t mount the same partition when I’m booted into linux. And if I run the usual tools from linux to fix the NTFS file system, itcan’t… Then when I boot back into windows, it does attempts to do a disk recovery that ends up messing up the partition. That, or I’m going insane…

Anyway, I’ve decided to run windows8 from inside linux as a virtualized container and not use raw disks as part of that. That way if it effs up again, I can just easily rebuild the container….

I’m sure part of the reason why this is effed up is because I’m in a triple boot environment between OSX, Linux, Windows 8 from a mac mini server that’s running dual SSD’s.

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[quote=spdrun](1) is flu a developer?
(2) wouldn’t that depend what system(s) they develop for? not all firms are large enough to want to pay out the nose for all possible subscriptions.[/quote]

1. Not for microsoft (as far as I can resist).
2. I do have a MSDN account BUT you really don’t want to mix up work related licenses with person licenses..

[Coronita]

So this is the situation.

This is the second time my windoze O/S failed to start up, and decided “fix” itself. Except in “fixing” it self, it apparently must have ran some NTFS file check tool which “fixed” the filesystem by wiping out the filesystem…

So now I have a dead system…
So I tried to reinstall windoze 8. But can’t because obviously the windoze 8 I have is an upgrade key from a previous version, for which I no longer have the install disks for…

I called tech support ,and basically they told me I was SOL and had to buy a new license key to allow me to do a fresh install…even though I explained them “I had a previous version of windoze until I upgraded and the upgrade crapped out..”

Someone suggested I should first install windows 8 without entering a license key. And then run the upgrade from windows 8 to windows 8, entering the license key thereafter to see if that works….

[Coronita]

[quote=sdgrrl]W2 salaries are the worst way to accumulate wealth BTW…[/quote]

[quote]
Would you expand on that?

Sincerely,

[/quote]

Sure. If I was to do it over again, I would have invested much much earlier in things like real estate where it could produce income without actually slaving away at a job…

Also, if I were to do it again, I would probably have focused more time on running my own company longer instead of converting over to a w2 when I got older….

W2 is taxed to the max….

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[quote=ucodegen][quote=flu]Lol. Sure. Though I don’t own either VLO or VLP anymore…. Sold VLO around 52.5 and sold VLP around 46 about 2.5 weeks ago….

Now I get to wait for the nice tax bill.[/quote]
Much better than having a loss/loss carryover. I’ll keep an eye on those two to see if the history repeats. I had BSTE(Biosite) quite a while back. Picked it up near the bottom before it got bought out. A lot of naked shorts on that one, that did not want to admit their screwup. Nice gain (big tax bill). I’ve had RMD for the run up too.. got too much of it (too large of a % of my portfolio – increases the risk too much). I should have re-allotted my account when I saw it at 55.
[quote=flu]Maybe I’ll short 200 shares of qualcomm just for completeness so some of you piggs will be able to afford your million+ homes when it passes $100/share…

And no worries, I’m sure we’ll see VLP go over $50 now and VLO go to $60…. Since obviously, it happens..after I sell….

Kinda like NXP Semiconductors which is over $50 now…[/quote]Interesting that you are considering shorting QCOM. I recently looked at S&Ps rating for QCOM.. using their ‘star’ rating.. it was 5, effectively a ‘buy’ rating. I’ll be looking into their 10K/Qs soon.

I’ll take a look at NXP in the next week or so.[/quote]

Damnit.. I told you so.. I’m totally the contrarian indicator…

1. vlp 37.38/share after hitting all time high of 38.10
2. nxpi 55.60, after hitting 52week high of 56.24…

Need I say more?

I was kidding about shorting qcom. It’s just that I figure if I did things would go up, and I would like to make my friends richer who either work there or own shares….

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[quote=exsdgal][quote=flu]Maybe I’ll short 200 shares of qualcomm just for completeness so some of you piggs will be able to afford your million+ homes when it passes $100/share…

And no worries, I’m sure we’ll see VLP go over $50 now and VLO go to $60…. Since obviously, it happens..after I sell….

Kinda like NXP Semiconductors which is over $50 now…[/quote]

FWIW until few years ago I followed zacks and valueline for my stock investments. Both of these were helpful for building my portfolio. Though my transactions were simple… no shorts/options etc. Zacks was from a for fee subscription, while I utilized county library for VL.

This said I am no longer actively vested in stocks… for lack of both funds and time!

Happy investing….[/quote]

I’m taking more of ucgal’s indirect advice in what she posted awhile ago.. Put stuff into indexes and forget about it until I really need it…

At least that’s what I’ve been doing partly…That and holding onto some cash in case any any short sales goes my way…

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[quote=sdgrrl]Gen X and latter for the most part will not have any type of pension. My hubbie’s two grandfathers both worked for Ford. One was white collar and the other blue collar. The blue collar one retired in his mid 60’s and lived till he was 97. The man had a great, albeit simple life.

My father in law receives his military pension, a pension from American Airlines, one from a co called Cobra and then SSI. The man is making more now then when he worked. He worked hard and I’m happy he gets to travel non stop and just enjoy life.

Flash forward to my hubbie- he invest in his 401k to the max, but the numbers still don’t make us feel comfortable. My income goes to savings as well, but it will take a great great deal of work to have the retirement my GF and FIL have had.[/quote]

Worrying about it is half the battle. Most people don’t know or don’t care… The fact that you and your hubby do already says something….

(At least that’s what I keep telling myself…)…

W2 salaries are the worst way to accumulate wealth BTW…

[Coronita]

Maybe I’ll short 200 shares of qualcomm just for completeness so some of you piggs will be able to afford your million+ homes when it passes $100/share…

And no worries, I’m sure we’ll see VLP go over $50 now and VLO go to $60…. Since obviously, it happens..after I sell….

Kinda like NXP Semiconductors which is over $50 now…

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