FRee Real Estate Training Archives

GrinnanMikeCPA  J. Michael Grinnan CPA

How do I Compute depreciation for tax purposes?

The simple concept of depreciation can get complicated very quickly when one is trying to determine the proper depreciation deduction for any particular asset. Here’s only a summary of some of what’s involved.

Identifying the asset

The modified accelerated cost recovery system (MACRS) is generally, but not always, used to depreciate tangible depreciable property placed in service after 1986. The MACRS deduction is computed on Form 4562, Depreciation and Amortization. Click Here for Full Video/Article (Members Only)

Real Estate Investor Deal Analysis Review Training Audio on Single Family Home

Jimmy Moncrief interviews Mike Butler to conduct a real “Deal Analysis Review” on a single family home that Jimmy wants to buy for a rental.

 

Back in May of this year, week of the Kentucky Derby here in my hometown, I had the great privilege and honor to meet Jimmy Moncrief and his sidekick and best friend Brad. Both are from Tennessee and were attending their first Kentucky Derby, a bucket list sort of thing I imagine.

Jimmy is one of my Gold Member and he had requested and scheduled a private one on one coaching/mentoring session, but in a very creative and unique way of doing it.

Jimmy wanted to record it as a live interview of a “Deal Analysis Review” on one of his pending leads on properties to buy. PLUS, Jimmy wanted permission to put it on his own website as a podcast thing. Here is the link to Jimmy Moncrief’s website http://realestatefinancehq.com/turn-landlording-autopilot/

I need your help please. A Little Feedback on the 2 questions below, thanks in advance.

QUESTION: Would You Like to Have Podcasts available from Mike Butler?
(please answer below by entering your answer and comments in reply area)

QUESTION: If you answered Yes, Do You Prefer Audio Only or both Video or Both?
(please answer below by entering your answer and comments in reply area)

 

Below is Jimmy Moncrief’s article and link to the podcast interview.

 


 Landlording on Auto-Pilot: A Simple, No-Brainer System for Higher Profits and Fewer Headaches

  Click Here for Full Video/Article (Members Only)

GrinnanMikeCPA

 

 

 

 

 

   J. Michael Grinnan CPA

 

FAQ: What is the self-employment tax?

Taxpayers who are self-employed must pay self-employment tax on their income from self-employment. The self-employment tax applies in lieu of Federal Insurance Contributions Act (FICA) taxes paid by employees and employers on compensation from employment. Like FICA taxes, the self-employment tax consists of taxes collected for Social Security and for Medicare (hospital insurance or HI).

The self-employment tax is levied and collected as part of the income tax. Click Here for Full Video/Article (Members Only)


WDRB 41 Louisville News

LOUISVILLE, Ky. (WDRB) — Police have arrested 54-year-old Anthony Jecker for shooting and killing another man at an apartment complex on Fegenbush Lane.

According to police, around 3 p.m. Jecker and his landlord got into an argument outside an apartment. 

They say the altercation then led to the suspect pulling out a gun and shooting the other man.

The victim was pronounced dead at the scene.

Neighbors and police both tell us that the apartment complex here on Norbrook drive and Fegenbush Lane is in a family friendly neighborhood, and this is very out of the ordinary.

“Someone decided to do something that, obviously, killed someone else and could have put a lot of people in danger.” LMPD spokesperson Dwight Mitchell said, “thankfully that was not the case, but unfortunately there was one person who did die from this.”

Neighbors say Jecker does live in the apartment complex with his wife and a dog.

They say his wife left in a police car. 

Jecker is charged with murder and tampering with physical evidence

link to full article
http://www.wdrb.com/story/26016414/lmpd-arrest-suspect-in-shooting-at-fegenbush-lane-apartment-complex

 

Short from Mike Butler

My prayers go out to this landlord and his family. Although at this time, the media has not released the name of the landllord who was killed by his own tenant, this is real life about how dangerous people are in today’s world. Even Mayberry, USA is not safe.

This should be a huge wake-up call to all rental property owners in how you communicate and treat your tenants. Odds are, this landlord was working his butt off to build for true financial freedom with his wife and family.

Please remember this landlord’s family in your thoughts and prayers.

PLEASE SHARE YOUR COMMENTS BELOW

 

 

Download Your FREE Poster by filling in the blanks in the form below

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Odds are, if you are in the residential rental property world, you have heard or know an investor who has been scammed by one of the internet dirt-bags.

This is nothing new. Remember the online scam where the victim is sent an email from who knows where, reporting they have won or inherited a billion dollars? But in order to claim it, the victim must pay for the processing fees and government stamps, etc.

You and I both say “there’s no way anyone with any sense would fall for this.” But Guess What? It is still happening every day with normal folks. These scammers would NOT be doing this if it did not work.

Here is how I know it is still happening and the scammers are still getting money from victims. My banker told me just a few weeks ago, he gets one or two customers a week who want to wire money to these scammers. Unbelievable. The scams continue.

Even as a retired Louisville Police detective, I have been scammed on several of my rentals. Let me share with you how it works.

The scammer surfs the internet for houses for rent. They find an unlimited supply of homes for rent on various websites from www.VistaKY.com, www.TenantFinderService.com, www.RentalHouses.com, www.Zillow.com, www.Craigslist.org and many more.

They find your rental house to target. The address is 123 Main St., Louisville, Ky 40207. It’s a 3 bedroom, 2 bath home with finished basement and 2 car attached garage. The rent for this home is $1200.

Here is what usually happens in this rental property scam.

STEP 1: After finding your target property, they download your all of your photos and details about this property from the online source they viewed. Think about this for a moment. The scammer has everything you have entered on the internet for the public to view. PLUS, most of the time they can use Google Maps to drive down the street, see what is on the corner (Walgreen’s, McD’s, etc) and the scammer can describe your rental and the neighborhood in great detail.

STEP 2: The scammer enters ALL of the information on your rental by “Stealing and Pasting” into a CraigsList.com Ad or any other website allowing investors to enter rental properties for free. The scammer lists the rent for your home at $899 which is a bargain for your rental home.

STEP 3: The Scammer’s ad will always have some kind of B.S. story about them being an “Out of Town Owner.” Some times they request a deposit up front and they will give them the key to see the home after receiving their money. They also inform the interested potential tenant that they have hired a local company to help get it rented and you might see their sign in the yard. Scammer tells them he is not satisfied with their service and he just decided to rent it himself or herself.

STEP 4: Unfortunately, many times the applicants actually send  money to the scammers and wait for the key to the house. After receiving no response, these folks then call the number on the yard sign and complain to the real owner (YOU) they want their money back. Don’t laugh, this is true.

You are totally blind-sided when you get this call. You are furious, ticked off, and want to find out exactly what is going on with your rental. Your jaw drops and you want to do something, take action now to stop it now.

What Can You Really Do? Think about it. Can you call the police? OK, what will the police do after hearing your story. First of all, you are NOT the victim. Your potential applicants are the victim. Who is going to pay for this? Who will get locked up and go to jail? Good Luck!

So what is a poor investor to do?

Here is your Best Tool To Prevent Your Leads from Being Scammed. It is simple and easy.

Your solution is shown below. Get some bright neon yellow paper and print.

Print 2 or 3 copies and place several on the inside of the front windows of your vacant rental and I promise, this will definitely get the attention of your prospective applicants.

To Your Continued $uccess,

Mike Butler

 

Attention Landlords and Property Managers

In my neck of the woods, we are having record setting extreme cold temperature that seem to keep lingering on and on. In the past, we are use to having a spike for a day or two and then warm weather returns.

This year, right now, Alaska is warmer than my hometown here in Louisville, Kentucky.

Frozen pipes can be a devastating blow to your wallet and bank account, especially when it seems to never leave.

Keep in mind, in my “Landlording On AutoPilot” system, we send a Resident Newsletter with each monthly billing of rent to our residents. Plenty of winter cold weather tips are always in each newsletter before the season hits us.

This year is different. It feels like we are living in the arctic or Siberia. In an effort to try to keep plumbing cost down, I created this email to send to all of our current residents.

Please note, I understand not every resident will follow these instructions, but if one resident does follow these instructions you have save money, time, and grief.

 

Here is the email. Feel free to steal and paste (copy and paste) to send to your residents (tenants).

Subject: “WARNING! How to Prevent Frozen Pipes and Headaches!

BODY:   

EXTREME COLD is happening and TONITE!

RECORD COLD Temps below ZERO

TIP: How to keep your pipes from freezing Click Here for Full Video/Article (Members Only)

Happy Holidays and Here Is Your New Secret Money Maker for Landlords

My BIG Secret Tip to Get Your January Rents PAID Early!

It Works! 

I have been doing it for over 20 years!

If you have tenants and rental properties, this is a NO-BRAINER to make sure your tenants pay next month’s rent early.

Step into your Tenant’s shoes for just a moment. Holiday season, cold weather with higher utilities bills, extra expenses for holiday season… gifts for family, kids, etc.

Here is a great, simple, POWERFUL tool to make you look like a wonderful person and at the same time, almost guarantees your rent payment bill gets put on TOP of their bills to pay first or now.

The simple version is your very own Season’s Greeting Holiday Rent Coupon! You can get my Holiday Rent Coupon for free by clicking on the link below.

 

Here is How It Works!

As you probably already know, we bill all of our tenants on the 20th of this month for next month’s rent.

This means on December 20th, next Friday, my office manager Whitney will send monthly statements to all Tenants. Included in their monthly statement is the Vista newsletter for residents and their Vista Holiday Rent Coupon is enclosed as well.

 

How Much is the Discount?

Today the Holiday Coupon is $10 and can only be redeemed by making January 2014 rent payment on or BEFORE January 1. PERIOD.

Years ago, I tried fresh turkeys… did not work and made a mess. Depending on the size of your heart and bank account, you could change to $25, $50 or even $100. 

Click to Get Your Email with Link to Download

Download Now

Accelerating or Deferring Income / Deductions as Part of a Year End Strategy
 
from Mike Grinnan CPA

The arrival of year end presents special opportunities for most taxpayers to take steps in lowering their tax liability. The tax law imposes tax liability based upon a “tax year.” For most individuals and small business, their tax year is the same as the calendar year. As 2013 year end gets closer, most taxpayers have a more accurate picture of what their tax liability will be in 2013 than at any other time during the current year. However, if you don’t like what you see, you have until year end to make improvements before your tax liability for 2013 is permanently set in stone.

A good part of year-end tax planning involves techniques to accelerate or postpone income or deductions, as your tax situation dictates. Efforts are generally focused on keeping projected tax liability for 2013 slightly lower than that anticipated for 2014, not overweighing projected tax liability for any one year. Having spikes in taxable income in any one tax year puts you in a higher average tax bracket than you would be in if you had evened out the amount of taxable income between the current and subsequent year.

Right to income versus cash receipt

Generally, a cash-basis taxpayer (which includes most individuals) recognizesincome when it is received and takes deductions when expenses are paid. There is a subtle but important difference between the two:

  • Income is generally taxable in the year that it is received, by cash or check or direct deposit. You cannot postpone tax on income by refusing payment until the following year once you have the right to that payment in the current year. However, if you make deferred payments a part of the overall transaction, you may legitimately postpone both the income and the tax on it into the year or years in which payment is made. Postponement in this context usually takes place in a business setting. Examples include: installment sales, on which gain is prorated and taxed based upon the years over which installment payments are made; like-kind exchanges through which no gain is realized except to the extent other non-like-kind property (including cash) may change hands; and, on a higher level, tax-free corporate reorganizations pursuant to special tax code provisions.
  • Deductions, on the other hand, are generally not allowed until you pay for the item or service for which you want to take the deduction. Merely accepting the liability to pay for a deductible item does not make it deduction. Therefore, a doctor’s bill does not become a medical expense deduction necessarily in the year that services are rendered or the bill is sent for payment. Rather, it is only considered deductible in the year in which you pay the bill. Determining when you pay your bills for tax purposes also has its nuances. A bill may be paid when cash is tendered; when a credit card is charged; or when a check is put in the mail (even if it is delivered in due course a few days into a new calendar year).

Compensation arrangements

Compensation arrangements carry their own special set of tax rules. The timing of the inclusion and deduction of compensation is largely governed by the employee’s and the employer’s normal methods of accounting. Under the cash method of accounting, amounts are includible in income when they are actually or constructively received and deductible when they are paid. Most employees are on the cash method.

Cash-basis employers can only deduct the cost of compensation the employee actually or constructively received. Constructive receipt comes into play when an employee attempts to decline offered compensation in order to defer its receipt and thereby postpone tax. Under the constructive receipt rule, the employee is currently taxed in this situation. However, there is no analogous constructive payment rule. Thus, a cash-basis employer may not take a deduction for amounts that it is willing to pay, and that it may have debited on its corporate books, but that it has not actually paid.

Deferred compensation plans, however, may be used to modify these general rules. There are basically two kinds of deferred compensation plans: qualified plans (such as 401(k) plans) and nonqualified plans or arrangements (common in executive compensation packages). Qualified plans are tax favored in that an employer can take an immediate deduction even though the employee might not recognize the income for years. With a nonqualified plan, the employer cannot take its deduction until the employee recognizes the income.

Particularly relevant to employers at year end is an annual bonus rule. Bonuses paid within a brief period of time after the end of the employer’s tax year may be deducted in that tax year. Compensation is generally considered to be paid within a brief period of time if it is paid within two and one-half months of the end of the employer’s tax year.

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Landlording On AutoPilot: A Simple, No-Brainer System for Higher Profits and Fewer Headaches

by Mike Butler

 

No author has had a greater impact on my landlording skills than Mike Butler and his book, Landlording on Auto-Pilot.

At the risk of sounding over-dramatic, the lessons I learned after reading it are the reason I spend as much time at home as I do – because Butler is all about creating systems to make the landlording process more automated … and they work.

There are so many tips in this book that I re-read it every year, just to be sure I’m not missing anything! Whether you are brand new to landlording or you have been renting homes out for decades – buy this book and read it… twice!”

BrandonTurner

Brandon Turner
Senior Editor
BiggerPockets.com

 Recommended For: Beginner, Intermediate, and Advanced Investors
Best Books on Landlording

Question from Scott:

Could you please tell me how many people you expect to have aboard for your Freat Investor Cruise in January 2014? My wife and I are hoping to attend. Wife hasn’t sprung the news to grandparents about watching our son yet..

Here is Your NO HYPE or B.S. Answer Scott. I LOVE Royal Caribbean Cruise Ships “Freedom of the Seas” and newer.

Your 7 Day Seminar at Sea is a BLAST and you can make your Family Vacation an Education Expense for your business. (Mike Grinnan, my CPA says so)

Attendance: It would be great to have 100 or more investors; however, in the real world, it could be anywhere from 30 to 70.

You get 7 days to network with serious investors from all over the USA, Australia and more. These are serious investors, no wanna-be’s or tire-kickers, and everyone is very willing to share their strategies and techniques that worked or failed. YOU are not their competition in their own backyard.

Your 7 Day Seminar at Sea begins at Port Canaveral Florida and you will spend a day at  St. Thomas, home of Megan Bay, St. Maarten, and Cocoa-Cay.

Each “Day at Sea” is your full day Seminar at Sea in a real conference center, not in a bar or lounge.

Just imagine not only classroom sessions, but relaxing on the beach (in January) with one of those cool, refreshing, umbrella in your drink, discussing real estate with investors from all over the world.

Having breakfast, lunch, dinner with me and investors if you wish. It is okay to take a break and let your free room service take care of you on your private balcony overlooking the ocean with breezes, the salty ocean smell and the beautiful sunrises and sunsets.  You will NEVER get this in a hotel room

TIMING: January is PERFECT to “Sharpen Your Saw” and review your goals from last year along with tweaking and setting new goals for 2014.

I am getting riled up just writing this little note about it. Come on, you will enjoy it and you will get a lot of one on one time in this small intimate group of serious investors.

Although it seems like it is a long way off in the future, it is very important you get your fully refundable deposit in ASAP.

Cost:  from Only $995 pp includes manual, conference tickets, cocktail party and over $1,000 in real estate investor training material in addition to all of wonderful stuff already included cruising on Freedom of the Seas.

for your http://GreatInvestorCruise.com

Register Now BEFORE RCCL raises the prices.

Call Janis Baker at 1-800-800-7703 ext 113.

 

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