Good Information received from Walt Sisk!
I never knew there were so many uses for it. After reading this.
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Hi Mike, When you put a rental property in a trust.
Can you set up a bank account to receive payments and pay expenses or do I have to get an LLC to do this?
I don’t want the bank to ask for the paperwork and see the beneficiaries.
Land Trust is a privacy instrument and is the owner of record.
Your beneficial interest, in our language, is the owner and reports the activity on tax returns.
if you use a LLC, you must have a bank account.
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We know that record keeping is a royal pain, and we also know that if your filing cabinet gets stolen, or is burned in a fire, or is tampered withl, you may end up in big trouble.
The days of waking up in the morning and finding out what Mrs. Jones wants you to do that day are pretty much over. From now on, pre-job planning is going to be very important. Who you hire, how you manage them, and how you will produce your work will all be very different from the world you have been living in.
I have recently converted a house I bought in 1988 that was my principal residence till 2009 into a rental unit under my LLC.
How do you suggest that this conversion be recorded so that it is tax advantaged for the LLC.
Meaning, when the property gets sold at some future date the LLC does not get hit with capital gains that is non-existent.
I am thinking of cost basis of the property circa 2009, what should it be?
Since it was a principal residence up until then no depreciation was taken or reported over the 20+ years; there were some improvements done since the house was originally bought; the market value and also the assessed value have gone up and down with the market, at any rate market values are irrelevant – what then would be proper accounting for the property in the books? Would appreciate if you would enlighten me
Fantastic Question Shaw!
Long story short, for the time being and in recent years, one could sell their residence for Tax Free Profit. There were some guidelines and limits. For example, a single person was limited to 250k profit and married was limited to 500k. Many investors were using this one tax strategies to generate big chunks of tax free cash about every 2 years.
Odds are, there is a time limit on such a beautiful tax strategy. This date I am not sure of and will have to check with my CPA, and I recommend you to do the same.
As far as the LLC, there are a number of variables to factor including how you are reporting the activity of your LLC. Are you reporting it as a sole proprietorship for tax purposes?
If not, you might be able to sell your residence to your LLC and get “tax free profit” on paper and start your LLC off with a high cost basis.
Either way, please get an expert real estate investor CPA to give you a very precise laser focused to your situation answer and solution.
I currently own a piece of property that i would like to put in a land trust, you said NOT to record it ,How can it be record on public record,if you don’t record it with the county records?
Joe, you record the "deed,"
george, great question (it’s great for me to get feedback as I will up the video)
To Your Continued $uccess!
My Question Mike:
I’m sure you’re aware of the new "Safe Act" that requires investors like me, who finance the purchasers of properties we sell, to get a Mortgage Brokers License and a Mortgage Lenders License with all the bureaucracy that goes along with it.
Do you have a "work-around" to avoid this "all-too-intrusive" and absurd law? Note that we own our properties free and clear at the time we sell them.
Great question Ron!
Quote From The SAFE ACT.
The maximum amount of penalty for each act or omission described in paragraph (a) of this section shall be $25,000.
HUD is poised to take away our rights to offer owner or seller financing on property we own.
Under the Safe Mortgage Act proposal, you can only offer owner financing on the home you live in one time every 3 years or you must become a licensed mortgage originator.
The SAFE Act is always lurking in the background. It is an ugly law for consumers and investors. The sole intent and purpose of this law is to protect consumers from predatory lenders. There are so many proposed procedures, many of which are being handed down to each state to handle all of the details.
Your ultimate and final answer Ron will be your state’s implementation of this insane law.
Watch for an upcoming Mike’s Mondays on this very topic with my real estate investor expert attorney Harry Borders.
Here are some links if you wish to dig around yourself. I have included the hud page for the SAFE Act and some more.
(Item F Page 66551 of the HUD Summary Comments).
The HUD proposals under the Safe Act are all part of the fall out
from the failed lending institutions and related to HR 1728 and HR 4173.
Monday, June 26, 9:48 am
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