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Old 10-08-2018, 05:57 PM
 
Location: Arizona
3,148 posts, read 2,718,173 times
Reputation: 6061

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Quote:
Originally Posted by mathjak107 View Post
A margin account let’s you borrow from a brokerage.

Real estate is certainly illiquid. You can only take loans against it , the same as any loan. In fact if the bank likes your face you can get loans with no property ,as a loan is still a loan , it ain’t your money..

You have to pay to borrow money. Helocs now have the same underwriting requirements as mortgages so , no you may not always get one. As well as helocs were closed in the financial debacle so you can’t count on them either .
At the risk of getting off the beaten path with obscurities, a margin acct doesn't compare to a 30yr conventional re-fi or a heloc. The idea that I can margin into more real estate or a new swimming pool is absurd. The whole advantage to traditional borrowing against RE equity (which banks love love love to do - it's a collateralized asset) is the ease and low risk.

And if you do borrow as in "it ain't your money.." it certainly SPENDS like your money with the added advantage that you still possess the asset you borrowed against - you still can keep any captital appreciation and use of the property. When you sell an asset it's gone, though you do get a pocket full of coin (to do what with is a whole 'nother problem).

Your facts may be correct, but your examples are far-flung and impractical.

Last edited by tommy64; 10-08-2018 at 06:05 PM..
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Old 10-08-2018, 06:23 PM
 
Location: SoCal
14,530 posts, read 20,054,132 times
Reputation: 10539
Getting back to the OP, what makes you think getting into home rentals is popular?

I think some people excel at that (like Ultrarunner) and some do not (that would be me).

I don't think the next big fad is going to be everybody leaving the stock market to become landlords.
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Old 10-08-2018, 07:44 PM
 
6,343 posts, read 11,538,862 times
Reputation: 6312
Quote:
we got burned delaying capital gains taxes when the rates jumped from 15% to 23.80% in 2014 . we would have saved thousands had we not kicked the tax can down the road
Your problem is you had big capital gains in one lump sum. That won't apply to everybody.

Yes there ARE tax advantages for someone who is actively managing, repairing and improving their own property but why would you understand that as it doesn't apply to you. It has nothing to do with depreciation or interest deductions.
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Old 10-09-2018, 02:33 AM
 
106,238 posts, read 108,237,907 times
Reputation: 79776
it can apply to anyone who accumulates big gains over the years and wants to cash out . people delay taxes all the time via 1031 exchanges . so if they eventually want to no longer be landlords they will have to deal with where tax rates are as well as other issues tied in to big capital gains like getting up to a a 700 a month increase in medicare premiums for a couple or getting whacked with the amt tax .

so it certainly is something to think about when you kick the tax can down the road.

tax deductions are based on PAYING EXPENSES or SPENDING MONEY . i don't care what expense it is , if you were able to ditch the expense your piggy bank would have more money in it then taking a deduction for an expense . the only questionable one is depreciation , which if you never sell can help .

we just had some renovations and new windows done in our 2 rentals . it cost us 19k . so yeah we get to take some deductions for it but i certainly would be ahead not having spent it . those apartments are not suddenly worth more then they were prior to the new windows , nor can we get more in rent , they just look better . if anything they may be a bit easier to sell , but selling even prior has never been an issue .

when you think about it the renter may actually have had the better tax deal .

most owners did not get to fly the empty seats since they had mortgages and real estate taxes to pay as well as any state and local taxes . in fact most owners can't even itemize ,especially if a couple .

the renter on the other hand generally got to fly the empty seats . they did not likely spend a whole lot of money on deductible expenses so they get a lot more money back from the standard deduction than an owner did . so tax wise the renter may actually have a better tax deal . remember , i said tax deal .

whether renting or being an owner is a better overall deal has a whole lot of other factors involved including opportunity costs . .

Last edited by mathjak107; 10-09-2018 at 03:03 AM..
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Old 10-09-2018, 10:11 AM
 
Location: SoCal
14,530 posts, read 20,054,132 times
Reputation: 10539
Quote:
Originally Posted by mathjak107 View Post
Most owners did not get to fly the empty seats since they had mortgages and real estate taxes to pay as well as any state and local taxes. In fact most owners can't even itemize, especially if a couple.
My CPA has advised me that beginning 2019 I will be very unlikely to be able to itemize due to the recent income tax law changes. I suspect this will affect a lot of people in the more affluent classes. At least it will obviate any need to keep such detailed records; less bookkeeping for me.
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Old 10-09-2018, 10:14 AM
 
106,238 posts, read 108,237,907 times
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Those in high cost of living areas with high state taxes and real estate taxes will likely do worse.
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Old 10-09-2018, 10:21 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,312 posts, read 8,504,387 times
Reputation: 16607
Quote:
Originally Posted by mathjak107 View Post
well that is to you . for those who do not want to hold the real estate until death then it gets paid back . as well as sustaining losses beyond depreciation for tax breaks is not a good thing period .
And once again it is all planning and goals. Based on most responses this thread should be renamed "the market is great for everyone and perfect and real estate sucks"
It's all good though. Real estate has gotten harder with increased numbers of investors so the fewer that stay in the market and out of real estate, the better for me.
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Old 10-09-2018, 10:23 AM
 
106,238 posts, read 108,237,907 times
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That does not have much to do with a lot of the old wives tales and myths that circulate when it comes to real estate . People think and believe a whole lot of mis beliefs
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Old 10-09-2018, 10:30 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,312 posts, read 8,504,387 times
Reputation: 16607
Quote:
Originally Posted by creeksitter View Post
Your problem is you had big capital gains in one lump sum. That won't apply to everybody.

Yes there ARE tax advantages for someone who is actively managing, repairing and improving their own property but why would you understand that as it doesn't apply to you. It has nothing to do with depreciation or interest deductions.
Mathjack could have just not invested in real estate and kept his money in the market and avoided the big capital gain tax he complained about. Fact is he said he made a boatload of money in real estate. Even with the slightly higher taxes, he made more money in the real estate deal and paying the taxes than if he had put the money in the market for the same period.
That is why some people invest in real estate, it can be very profitable.
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Old 10-09-2018, 10:32 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,312 posts, read 8,504,387 times
Reputation: 16607
Quote:
Originally Posted by mathjak107 View Post
That does not have much to do with a lot of the old wives tales and myths that circulate when it comes to real estate . People think and believe a whole lot of mis beliefs
You mean like all rentals have tenants from hell and call you at 2 am? Those kinds of wives tales and beliefs?
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