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Old 04-19-2017, 02:10 PM
 
5,221 posts, read 2,377,031 times
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Quote:
Originally Posted by Submariner View Post
On a Schedule C, E, or F, your expenses are subtracted from the income.
I know exactly how Schedules C, E, and F work. Income is what is left after your expenses are subtracted from the revenue.

Quote:
You should really look at the Schedule Cs, Es and Fs.

All expenses [including mortgage payments] are deducted from the income.
Nope. Mortgage payments are NEVER deducted from revenues (except for the interest portion). The way that the payment gets "deducted" is through depreciation. Over 27.7 years.

Quote:
You are thinking of Single-Family-Residences, not Multi-Family-Residences.
No, I'm not. The mortgage payment isn't deducted. It is recovered through depreciation.

You missed one of the key questions. Here it is again:

Quote:
With an AGI of less than $1,000, what money did you live on?
Now here is something else that doesn't make any sense:

Quote:
My salary income maxxed at about $65k/year.

This thread asks: "Is it possible to retire on 36k?"

My pension is $1,480/month [$17k+]

I am foggy about what topic you are whining about.
You describe income ranging from $17k a year up to $65k a year, and during your time in the navy it was about $36k, give or take, correct? However, you haven't paid income taxes since 1983 and you keep your AGI under $1,000. So, your rental activities have had to throw off losses ranging from $16k-$64k per year in order to shield that other income from taxation.

Sorry, but that is not economically viable. Unless there are some other HUGE issues that you have conveniently left out, what you have been describing is impossible.
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Old 04-19-2017, 02:29 PM
 
Location: Londonderry, NH
41,505 posts, read 49,547,847 times
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I retired three years ago after the mortgage was paid off about a 36 grand pension. A couple of years ago one of my old rusted out clunker cars failed to pass inspection (cast a shadow in bright sunlight) and was scrapped. After consulting with my wife and chief enabler instead of buying another cheap clunker we bought a 2004 Corvette Coupe with about 50 k miles. Since them we have added 30 k miles and spent a substantial amount on deferred maintenance and interior upgrades.


We figure we have been frugal too damn long and might as well enjoy what time we have left. The Vette helps us do that. Now all we have to do is find a less expensive place to live and cash in this place.


PS: to the kids. Take advantage of any retirement plan your company might offer as well as starting your own IRA with a 1% per month after tax contribution. Be very careful to avoid bubbles (we did not lose anything in 2007-8) and leave the stash alone until you really need it. Then borrow against it to buy your retirement toy or whatever.
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Old 04-19-2017, 03:01 PM
 
Location: Forests of Maine
29,722 posts, read 47,483,706 times
Reputation: 17565
Quote:
Originally Posted by TaxPhd View Post
I know exactly how Schedules C, E, and F work. Income is what is left after your expenses are subtracted from the revenue.

Nope. Mortgage payments are NEVER deducted from revenues (except for the interest portion).
We got rid of our last MFR in 2008. We have not filed a Schedule E since then. Perhaps it has changed. We were using our mortgage payments as write-offs, and we were audited 3 times during that period.



Quote:
... You describe income ranging from $17k a year up to $65k a year
Comparing my current pension income to my previous Active Duty income.



Quote:
... and during your time in the navy it was about $36k, give or take, correct?
Not really.

When I first enlisted and was attended the various schools I received a lower income. I could have re-enlisted when I graduated my A and C schools and gotten a SRB bonus, but I did not. Once I got to the fleet I began receiving all the extra pays and allowances. Eventually, I did Re-Enlist for the bonus money, every 4 years.

The number you are quoting would likely be base-pay. Which is a small portion of take-home pay.



Quote:
... However, you haven't paid income taxes since 1983 and you keep your AGI under $1,000. So, your rental activities have had to throw off losses ranging from $16k-$64k per year in order to shield that other income from taxation.
Again my lower income is now as a retiree. The higher income was when I was on Active Duty.

The biggest help for my tax filing has been the MFRs. They provide extreme sheltering.

The only other feature is the 'FBM boomer deduction'. Which helped some, but without the MFRs it would not have done much. It is a minor feature of itemizing for some professions.
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Old 04-19-2017, 03:16 PM
 
5,221 posts, read 2,377,031 times
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Quote:
Originally Posted by Submariner View Post
We got rid of our last MFR in 2008. We have not filed a Schedule E since then. Perhaps it has changed. We were using our mortgage payments as write-offs, and we were audited 3 times during that period.
I have been doing this professionally since well before 2008. It hasn't changed, and mortgage payments were NEVER allowed as a deduction, whether single-family or multi-family dwelling units. The amount of the payment is only allowed to be recovered through depreciation. Whether you were audited or not is completely irrelevant.

However, regardless of whether or not it was allowed, what you described still would have required your properties to throw off the losses that I described previously in order to shelter your other income. As I said, what you have described is an impossibility. Without a significant influx of outside cash, losses of tens of thousands of dollars a year for more than 30 years is IMPOSSIBLE.

Now that you no longer have those rentals, what are you doing that is throwing off sufficient losses to shelter your other retirement income? And how are you able to continue with those losses year after year and not run afoul of the hobby loss rules?

And lastly, how about taking a crack at this question:

Quote:
With an AGI of less than $1,000, what money did (and do) you live on?
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Old 04-19-2017, 04:31 PM
 
Location: Forests of Maine
29,722 posts, read 47,483,706 times
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Quote:
Originally Posted by TaxPhd View Post
...Now that you no longer have those rentals, what are you doing that is throwing off sufficient losses to shelter your other retirement income?
My 'other' retirement income? I have my pension and a small bit from farming.

It does not take much to duck below the 2016 standard deduction + personal exemptions amount. [The standard deduction $12,600 for married couples filing jointly. The personal exemption is $4,050. For a couple then $12,699 + 4,050 + 4,050 = $20,700]

A couple needs to earn more than $20,700 before they can even begin to paying income taxes.

For a couple the minimum gross income to pay taxes is $20,700.



Quote:
... And how are you able to continue with those losses year after year and not run afoul of the hobby loss rules?
An interesting Schedule F I have been playing with the past 10 years is forestry. Our retirement homestead is on 150 acres of forest. I hire a certified forester every 10 years to review my management methods and it stays as such. Harvests can easily be 40 years apart, if ever.



Quote:
... And lastly, how about taking a crack at this question:
I have gone over this in detail many times. All you want is to argue about it. No thanks.
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Old 04-19-2017, 04:40 PM
 
5,221 posts, read 2,377,031 times
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Quote:
Originally Posted by Submariner View Post
My 'other' retirement income? I have my pension and a small bit from farming.

It does not take much to duck below the 2016 standard deduction + personal exemptions amount. [The standard deduction $12,600 for married couples filing jointly. The personal exemption is $4,050. For a couple then $12,699 + 4,050 + 4,050 = $20,700]

A couple needs to earn more than $20,700 before they can even begin to paying income taxes.

For a couple the minimum gross income to pay taxes is $20,700.
Your story keeps changing. You have said that you maintain an AGI at less than $1,000. AGI is calculated BEFORE standard deductions and personal/dependency exemptions are taken into account. To get that AGI to under $1,000, some of your activities have to be throwing off losses. And they would have to do it for more than 30 years.

Quote:
An interesting Schedule F I have been playing with the past 10 years is forestry. Our retirement homestead is on 150 acres of forest. I hire a certified forester every 10 years to review my management methods and it stays as such. Harvests can easily be 40 years apart, if ever.
That doesn't answer the question. You had to have big losses every year. How did you avoid the hobby loss limitations?

Quote:
I have gone over this in detail many times. All you want is to argue about it. No thanks.
No you haven't, which is why I keep asking the question.

With AGI <$1,000 a year, what money do you live on?
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Old 04-19-2017, 04:58 PM
 
Location: Florida -
8,238 posts, read 9,994,274 times
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Quote:
Originally Posted by lottamoxie View Post
$36K in the future when you're 58 yrs old would be like $20K/year today (rough estimate). If that $36K/year is adjusted for inflation then you might be able to live off of it okay. If it's not, imagine living off of $20K/year now.

The cumulative rate of inflation over the past 30-years is 106%. IOW, a $20 item in 1988 would cost one $41.22 today (Inflation Calculator | Find US Dollar's Value from 1913-2017). At the same rate, by the time you are 58, what you can buy for $36K per year now, will cost you about $73K then.

Another way of looking at it is: $36K in 30-years would give you the equivalent buying power of about $17K today. If you believe you could live as you wish today on $17K, you will probably be able to retire at age 58 on $36K.

Realistically, your income should at least keep pace with inflation - which means that your expectation of $36K in 30-years, is probably under-expected.
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Old 04-19-2017, 05:20 PM
 
Location: Gilbert, AZ
3,003 posts, read 1,695,130 times
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Quote:
Originally Posted by TaxPhd View Post
I have been doing this professionally since well before 2008. It hasn't changed, and mortgage payments were NEVER allowed as a deduction, whether single-family or multi-family dwelling units. The amount of the payment is only allowed to be recovered through depreciation. Whether you were audited or not is completely irrelevant.

However, regardless of whether or not it was allowed, what you described still would have required your properties to throw off the losses that I described previously in order to shelter your other income. As I said, what you have described is an impossibility. Without a significant influx of outside cash, losses of tens of thousands of dollars a year for more than 30 years is IMPOSSIBLE.

I'm waiting with great anticipation for the discussion on "like kind" exchanges
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Old 04-19-2017, 05:45 PM
 
5,221 posts, read 2,377,031 times
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Quote:
Originally Posted by hikernut View Post
I'm waiting with great anticipation for the discussion on "like kind" exchanges
Submariner hasn't suggested in the past that he was doing any, but even if he had, it wouldn't change the conclusion of impossibility.
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Old 04-19-2017, 06:00 PM
 
Location: Western North Carolina
4,743 posts, read 7,535,549 times
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Quote:
Originally Posted by freemkt View Post
LOL. As a working person who has never earned half as much as 36k in a year, I can assure you that it is possible to retire on 36k.
I know, I have been working for 40 years and have NEVER made 36k.

I'd live quite well on that, I assure you.

It's so much about WHERE you live, and what you feel is important and worth the cost (materially and otherwise).
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