Landlord Tips – Avoiding the Huge Costs of Tax Preparation

October 10, 2009 · Posted in Regulations For your Investment · Comments Off 

As a landlord, your tightest months for cash flow are usually at the end of the winter and beginning of spring, in March, April and May. You’ve just finished paying for the extra costs that winter brings; sky-high utility bills, snow and ice removal, heating issues and so on. Not only that, but any vacant units probably took longer to fill because people are less likely to move during the winter. You might even have had damage from ice dams or frozen pipes.

The end of the winter is the worst possible time to get a huge unexpected bill. And yet here it comes; hundreds or even thousands of dollars due to your {{{CPA or bookkeeper|tax advisor}}}.

Fortunately, there are ways to really reduce this bill without adding a lot to your workload. The key is to organize your tax documents in a way that will let your tax advisor (or yourself, if you do your own business taxes) prepare your return in a lot less time.

I use property management software to organize all of my income, expenses and assets, and make sure that my bank account statements match up with my own personal accounting. It’s faster than maintaining my records in Excel, and it only takes a little longer than the method used by lots of old-school landlords; stuffing all their records into a shoe box and hoping for the best. Read more

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The Section 20 Notice Explained

December 4, 2007 · Posted in Regulations For your Investment · Comments Off 

The aim of the section 20 notice is to make the both parties involved in the lease (the lessor and the lessee) of a property responsible for paying a share of renovations costs. This is especially true for council who are increasingly using this piece of legislation to renovate their property portfolios. On top of the obvious problem of paying, the section 20 notice can also exert an extreme amount of pressure on someone trying to sell their property, as it has the potential to put off the buyer who does not want to pay for this ‘outrage’ only a few days/weeks after having moved in.

Additionally, the amount of time it takes to renovate a property means that on top of the financial problems raised by the section 20 notice, there will be structural problems relative to the type of renovation being undertaken. However, you can also understand that even if a buyer agrees to a sale on a property he knows is going to be subject to a section 20 notice, he will not be happy by the presence of scaffoldings or other building materials.

Furthermore, you as a property owner are required by law to inform the prospective buyer of the property about this section 20 notice if you have already received it. Getting out a ‘section 20 notice situation’ can be tough if you do not have the cash flow to finance the renovation of your property; however, there are some companies out there that will help.

Some services on the internet will provide you with information about how to make money on the side of your day job, but beware of ‘get quick rich’ or pyramid schemes as they have been proven to make you loose more money than you earn, if you do earn anything. On th other hand, there are some companies that will make sure you do not have to pay a penny of the requested amount by making an offer for your home -which usually results in a sale in less than a week. They usually offer cash lump sums, buy back and rent back options, but will only pay around 90% of the market price of your property. They are, however, a solution that should not be overlooked as they have helped many people avoid repossession of their home in the past. Read more

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1031 Deferred Exchange – Real Estate Investment Property Qualifications And Rules

December 4, 2007 · Posted in Regulations For your Investment · Comments Off 

A 1031 exchange is a strategy used to defer or eliminate the payment of capital gains taxes arising from selling a real estate property used for investment or for “productive use” in a business or trade. It is named as such because “1031″ is the IRS code section 1031. “Exchange” refers to the core of the strategy in which one investment property is sold (relinquished) and a new investment property is purchased (acquired) and intended to replace the sold property.

*Review of Capital Gains*

A capital gain is known as the profit from selling an investment. It is the difference between the cost basis of purchasing the investment and the amount for which it was sold.

Capital Gain Tax Deferral Through a 1031 Exchange

A 1031 Exchange would enable the investor to avoid paying tax on the capital gains realized from the sale of an investment or business property. A third party intermediary, an entity not related to either party, would retain the capital gains (profit) from the sale until a replacement investment property is found and purchased by the investor.

The capital gains realized from the sale of the investment property will be applied to the purchase of the newly acquired property, thus avoiding the payment of capital gains taxes. Very specific requirements must be met and only certain properties qualify for a 1031 exchange.

Determining If Your Property Qualifies For a 1031 Exchange

The detailed process of Read more

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