January 3, 2011

A New House for the New Year

Just because the end of year sales are over doesn’t mean you can’t find a bargain in the housing market.  Here’s one all ready for you to celebrate moving in!  Thanks to Burbed reader SEA for finding this festive property.

37003 Arden St, Newark, CA 94560
$199,000

image

BEDS: 2
BATHS: 1
SQ. FT.: 816
$/SQ. FT.: $244
LOT SIZE: 5,000 Sq. Ft.
PROPERTY TYPE: Detached Single Family
STORIES: 1
YEAR BUILT: 1922
COMMUNITY: Alameda County
COUNTY: Alameda
MLS#: 81042954
SOURCE: MLSListings
STATUS: Active
ON REDFIN: 125 days

TLC Needed, but a good value.

Here’s what SEA had to say about the house:

If you really want some instant equity in that area, take a look at [this place].

Sold May 2006 for $581k.
Listed today for $199k.

That’s 2/3 off!

Of course all these homes at 50%+ off peak pricing, they cannot impact the RBA pricing. In fact, the ratio of RBA pricing to non-RBA BA pricing keeps going ever higher.

With all that positive cash flow from day one, it’s difficult for me to understand why these places are for sale, foreclosed.

And that’s not even considering all the income tax advantage that the landlord keeps. What person lets a cash cow go to foreclosure?

And let’s not even get started on the difference in cash flow if I were to buy this place today versus the landlord who owns another unit in the area purchased for ~$600k in 2006. I’m sure he’ll have no problem passing his extra expenses on to the tenant, or so the theory goes.

imageWe can talk cash cow if you want, but we’d be a lot further afield from Google if we did.  Supposedly the Price to Rent ratio in Fresno is (are you ready?)… 8.  So let’s stick with Newark for now, as it has more sushi shacks than silos.

Plus this house is ready to party down with your bad self.  So if you’re one of those people who need a big hank of the hair of the dog that bit you, head on over to the bank today. Tell them you heard it’s a short time to homeownership.

Comments (316) -- Posted by: madhaus @ 5:04 am

316 Responses to “A New House for the New Year”

  1. SEA Says:

    That Business Journal author assumes prices can only go up. Let’s take this place as an example. $200k/8 = $25k in annual rent. Ignoring the taxes, maintenance, and so on, it should be quite clear that if prices go down by 12.5% [=$25k], or more, then it’s still cheaper to rent.

    Oh, and if you don’t like my claim that there was assumption that prices can only go up, maybe the right question should be given a purchase-price-to-annual-rent ratio of 8, where is the break-even point in terms of market value change? It might be below zero, but it’s clearly greater than negative 12.5%. Yes, the discount rate and expenses will impact the break-even point.

  2. madhaus Says:

    Do you seriously think the price to rent ratio in Newark is 8? I suspect it’s still above 15, which is the assumed breakpoint to move between rent vs buy (remember, buy low, rent high).

    Back in the glory days of the bubble, San Jose was routinely showing price rent ratios over 30 and San Francisco went over 40.

  3. SEA Says:

    I assumed the ratio of 8 to be correct. That said, I know a guy who “couldn’t lose” by buying Vegas property that had “excellent rent ratios.”

    Two things happened:

    1. Rents went down considerably.
    2. Selling prices have gone considerably.

    I’m not sure what’s happened to the ratio of these two. For the sake of discussion, let’s assume that both have gone down in such a way that the purchase-price-to-rent ratio has remained constant. Thus there is the same buy signal today, using this one ratio.

    I should note, however, that it’s my guess that the selling prices went down suddenly versus rents. When he was looking at the ratio of purchase prices to rent, the rents were too high, since they would be soon to adjust lower. In other words, selling prices were less sticky than rents, for lack of a better way to put it.

  4. CB Says:

    Low end houses in Newark are renting for $1400-1600.

    With 10% down, I put PITI at about $1200. I can’t tell the future, but I say this is a healthy market in Newark.

  5. SEA Says:

    For example, “37054 Walnut Street, Newark, Rent $1450.00. $2000.00 security deposit. ( RENT INCLUDES 3 UTILITIES WATER, GARBAGE & PG&E (power & gas ) Recently remodeled, 3 bedroom 1 bath house.”

  6. A. Lewis Says:

    #1, I love it when you use a lot of math. I and I like your claim that prices can only go up is an assumption. In Fresno, it’s a very wrong assumption!

  7. madhaus Says:

    So if this house rented for $1400 a month, that’s an annual rent of $16,800. Asking price of $200K implies a rent ratio of 11.9. That’s not Fresno low, but it’s still a buy signal bearing in mind the assumption that neither price nor rents will ever go lower.

    You like numbers, SEA, why don’t you let us know what the rent ratio is in some other favorite zips around here. :)

  8. Petsmart Groomer Says:

    The listing agent did not have the balls to add “perfect for entertaining”… Lame.

  9. SEA Says:

    In regards to those rent ratios, let’s just say that if it’s not favorable to buy at 8, it’s definitely not favorable to buy at 30, 40, or more.

  10. CB Says:

    I don’t imagine this particular home appreciating even with the CPI. The homes facing Thornton Ave, which this is right next to are business converts. The neighborhood is a wannabe thug den, and I’d home-school my children in central Nevada before sending them to the neighborhood elementary.

    But if a cash investor can rent this out 10 of 12 months a year for 1300/mo the return is about 6.2% after taxes. I’ll let SEA grind these numbers through the NF2B 2010 Calculator, but double the CPI is not a bad place to park some money if you have it.

  11. SEA Says:

    CB- As outlined in #1 and #3, as long as the selling price does not go down…

  12. CB Says:

    I know, SEA. I’m just as excited as you to use a bunch of words to say the same thing ever again.

    I know I’m being contradictory with this house. I wouldn’t touch it with a 10 ft pole, but I’m advocating for it’s profitability. Positive emotions influence people to buy homes they shouldn’t. Perhaps my negative emotions are influencing me to stay away from this one. Real estate is emotional, man.

    I’m looking for a condo toward the south part of town, but this property does come up in my searches sparking some interest. It’s 50-60k out of my price range, so a non-issue.

  13. SEA Says:

    Don’t get me wrong, a couple of years ago I purchased a new automobile. I fully expect that the value is approaching zero, and, relatively speaking, much quicker than this party house. That’s not to say I am disappointed with my purchase–quite the contrary.

    Remember the “gallon of milk test?” I’m too lazy to link, but I’ve rarely heard anyone suggest that a gallon of milk should go up in value. Matter of fact, as a practical matter, as soon as it’s purchased the retail value quickly goes to zero, but the historic cost remains. It won’t be long* until the milk is either consumed or spoiled.

    A few years ago there was a general expectation that housing would appreciate big. Be it from limited supply, “They are not making anymore land,” or proximity to income, or whatever, the was an underlying assumption is that housing only goes up.

    If we carefully divide the operating costs away from the market returns, then using the correct metric system, we might be able to suggest:

    Total Return = Operating returns + market value change

    Now let’s use an expected CPI as our discount rate. Also let’s set the expected CPI to 3%, so now our discount rate is 3%.

    If the market value change is the standard 7.2%, as has been claimed with the standard 10 year RBA double, then we can afford to lose on the operating basis. That is we can rent for less than operating costs because of the high positive, favorable market value returns.

    *long is measured against my discount rate and expectations related to milk. There are probably some very low income people who think milk does not last long enough, or, alternatively, costs too much in the first place.

  14. madhaus Says:

    Or people like me who buy milk by the quart and often throw half of that out. I just don’t get people who drink milk. I don’t like it and neither does anyone else in my family. As far as we’re concerned, milk is an ingredient for cooking only.

    So when I buy a quart (not a gallon) of milk, I already know I’m paying way more than its utility, since I’m buying it in a smaller amount and don’t expect to use all 32 oz before it goes bad.

    So my discount rate on milk means I expect the $2 I spend to give me $1 of utility at most. And that $1 quantity would cost you about 25 cents since you’re buying it in larger units.

    Instead, I should use the pound of coffee test, since coffee is something I have to buy regularly but has the virtue of not going bad before it’s consumed. Maybe the pound of tofu test? Those have a limited shelf life and costs 10% or so what the coffee does, so a lot closer to the idea of milk.

    Milk… bleah.

  15. nomadic Says:

    Just don’t try the pound of sushi test, madhaus.

    You should try the ultra-pasteurized organic milk – the shelf life is twice as long as regular milk.

  16. The Gilroy Alex Says:

    So ….. it’s a $600k house for $200k. Better get in and buy it before the bidding war eats up the huge GAIN you can make by buying this!

  17. madhaus Says:

    #15, I’m one of those mildly granola types (no patchouli oil on these sandals) who buys organic when I can, but organic milk is not sold in quarts around here. I can’t justify spending $5.50 for a half gallon of the stuff when I’m struggling to use a pint within 10 days.

    If there’s one thing I insist on organic over conventional, it’s strawberries. The way conventional strawberries are grown, with the gas treatment of the land, means I won’t buy those.

    Now if I buy today’s house, I could afford to throw away 26 half-gallons of milk a year!

  18. bob Says:

    Totally agree about strawberries. Besides- not sure about where you live, but in Alameda strawberries grow like weeds. I planted some in our garden and they literally took over the whole garden in about a year. I used to love them but since we pick something like 5-6 quarts out of the garden per week from spring to summer I got a little tired of them. Best part of all is that the plants don’t die because it doesn’t get as cold here. They simply multiply.

  19. SEA Says:

    My guess is that Godwin’s law could be applied to just about anything. Given enough time, the conversation will focus on strawberries. Or possibly, given enough time, the discussion will focus on Godwin’s law, even if the underlying focus of Godwin’s law was never mentioned.

  20. madhaus Says:

    In the case of burbed, Godwin’s law applies to Prop 13. All real estate discussions eventually come down to Prop 13, in which case tempers flare and rational discussion is over.

    *smacks head* Wait, this is Burbed! Rational discussion? Who are we kidding?

  21. SEA Says:

    I thought Godwin’s law was about Sushi.

  22. Petsmart Groomer Says:

    Prop 13 -> Real estate -> Strawberry picker in Salinas -> Strawberries

    Only 3 degrees of separation.

  23. Pralay Says:

    Don’t forget Real Estater Strawberry Picker.

  24. Real Estater Says:

    Don’t forget Pralay the New Year’s eve par-tayer!

  25. madhaus Says:

    Well, did you two meet at Face Book? I was at University Avenue Star Bucks this morning but did not see either of you. I was looking for two men shaking fingers at each other and all I saw were dog walkers and people who have lived in the neighborhood 40 years. All the worker bees were at work.

    So I made an offer on place around the corner.

  26. Real Estater Says:

    How many times do you want me to invite him? I extended my most cordial, sincere invitation, but he turned it down over and over gain, using some lame excuse that he needs my home address. I’m very disappointed, as I’m sure everyone else is.

  27. Pralay Says:

    How many times do you want me to invite him?
    —–

    “Invite”? I agreed to invite you in my next New Year Eve party? In exchange, instead of inviting me in your home and allowing me to enjoy your custom-built furniture and exotic plants, all you could do is invite offer “free coffee in 94301″! :( And you call it “invite”! I just couldn’t sleep in excitement after that invite offer.

  28. Pralay Says:

    So I made an offer on place around the corner.
    —–

    September listed price $3,968,000.
    Current listed price $2,988,000

    So how much overbidding did you do on 354 Poe St? $4M?

  29. nomadic Says:

    Yeah, but she missed the big opportunity – the September list price was $2,368,000.

  30. Pralay Says:

    That price does not matter. It was just starting price. Overbidding is going to take price where seller wants to be – $4M.

  31. Real Estater Says:

    Pralay,

    As usual, everything was already explained to you in the past.

    What’s the matter? The party animal is too shy to come to a public coffee shop?

  32. Pralay Says:

    As usual, everything was already explained to you in the past.
    ——

    Another “explained in past”? :)
    I agreed to invite you in my party because you are lonely. Is “free coffee in 94301″ the only incentive you can offer in return? Not even allowing me to watch exotic plant in your backyard? :( Poor me.

  33. SEA Says:

    #31- FYI: B is the new C.

  34. nomadic Says:

    While you guys are here re-hashing old arguments, I found that we have finally BEATEN our arch-nemesis Manhattan!

    According to Moody’s the price/rent ratio is higher in San Jose (32) than Manhattan (28):

    http://finance.fortune.cnn.com/2011/01/04/rent-vs-own-ratio-to-flip-in-2011/

  35. SEA Says:

    And the RBA still extends to the north:

    “San Diego, CA 21.75
    San Francisco, CA 27.17
    San Jose, CA 32.27
    Seattle, CA 26.96″

    Yep, that’s right, 26.96 for the northern most part of the RBA.

  36. Pralay Says:

    I found that we have finally BEATEN our arch-nemesis Manhattan!
    —-

    Considering the fact that REAL Burbed of REAL Bay Area is missing, I am not counting on new SJ-NY comparison. May be madhaus can shed light on North-Central New Jersey with ratio 24.69.

  37. Real Estater Says:

    >>According to Moody’s the price/rent ratio is higher in San Jose (32) than Manhattan (28)

    That’s why Tracy is a great place to invest right now.

  38. nomadic Says:

    Useless aggregate data, RE.

  39. Pralay Says:

    That’s why Tracy is a great place to invest right now.
    ——

    Given the glut of rental homes in Tracy, the buy/rent ratio of Tracy is going to be infinity. Who would rent a 3-bedroom SFH in Tracy? The manager of burger joint? Just like RBA, “rent simply doesn’t matter” – just opposite way.

  40. Real Estater Says:

    Let’s check Palo Alto. Wow, twice as many listings in Palo Alto!

    This is a typical example of you talking out of your ass. Tracy is one of the best rental markets around. Lots of people want to rent there for the same reason you are renting — insufficient money in the pocket but still want to live in a house. When something is low in price, there’s always a market.

  41. madhaus Says:

    Well if you specify zero instead of three bedrooms, of course you get twice as many listings. Better trolls, please.

  42. Real Estater Says:

    Btw, rent does not matter in the RBA, but it matters in Tracy. You buy Palo Alto for appreciation; you buy Tracy for income. They are opposites but both can make you money.

  43. Pralay Says:

    Let’s check Palo Alto. Wow, twice as many listings in Palo Alto!

    This is a typical example of you talking out of your ass.
    —–

    My Tracy listing was for 3 bedroom. Here the better filter for Palo Alto, Mr “Average Tech Guy” who cannot even filter craiglist listing. Only 36.

    Who is talking from ass now?

  44. SEA Says:

    “When something is low in price, there’s always a market.”

    What about flyover country?

  45. SEA Says:

    “rent does not matter in the RBA”

    Sounds very advantageous to rent in the RBA.

  46. Pralay Says:

    Even better Tracy list for Mr “Average Tech Guy”. This time with “available” tag, which normally means most of them are sitting empty for some time, if not months. Happy lanlording in Tracy.

  47. Pralay Says:

    Lots of people want to rent there for the same reason you are renting — insufficient money in the pocket but still want to live in a house.
    —-

    Amazing understanding of rental market by Mr Landlord. I don’t rent in Tracy. So your analogy is mute. People don’t need go to ALL THE WAY to Tracy to RENT.

    If Tracy was such a great rental market, you would see high-density apartment buildings popping up left and right in Tracy – just like Palo Alto and Sunnyvale. If someone works in Dublin, he does not need to rent a 3-bedroom SFH in Tracy for $1600 when he can rent a 3-bedroom SFH in Dublin for $1800 (or may be $2000). The only reason there are so many SFH rentals in Tracy is for investors like you who are hoping to flip at some point (and rental is a temporary measure for covering cost).

  48. Pralay Says:

    You buy Palo Alto for appreciation; you buy Tracy for income.
    —-

    You buy in Tracy for flipping, Mr Landlord. There is no rental market in Tracy. The only reason some people bought (NOT renting) home there because they couldn’t afford to buy anywhere else. Happy lanlording in Tracy.

  49. Pralay Says:

    “When something is low in price, there’s always a market.”

    What about flyover country?
    ——

    I would recommend Detroit.
    When something is low in price….like $100, there’s always a market.

  50. Real Estater Says:

    Pralay,

    Sounds like you are the expert in Tracy? Have you even been there? I rented my place out in a little less than 3 weeks. Most properties there rent in less than a month, because it is a great deal to live in a newish house for what amounts to apartment rent in the Bay Area. You have to live where you are because you have a programming job in SV. Lots of people do not work in that type of job and have no reason to pay $2000+ a month to live in a crap house. You don’t even need to invite me over and I already know you live in a crap house, because unless you can afford Rivermark, you almost certainly live in a crap house.

  51. Pralay Says:

    I rented my place out in a little less than 3 weeks.
    —–

    :) After reading your #42, I seriously doubt you actually bought anytime in Tracy. If you bought a Tracy home for “income”, you bought it for wrong reason. I can imagine an investor buying there for flipping, but not for “income”. :)

  52. Pralay Says:

    Addition to 51: Let’s put it this way – may be Real Estater is thinking about buying in Tracy.

  53. Pralay Says:

    Most properties there rent in less than a month,
    —-

    I can tell that from the glut of rentals in craiglist. ;)

  54. Pralay Says:

    Lots of people do not work in that type of job and have no reason to pay $2000+ a month to live in a crap house.

    Yes, I know some retired people who sold their homes in South Bay, took the equity money and using part of their equity they bought homes in Tracy. They don’t rent in Tracy.

  55. Pralay Says:

    Lots of people do not work in that type of job and have no reason to pay $2000+ a month to live in a crap house.
    —-

    They have no reason to pay rent $2000 in Tracy either.

  56. Pralay Says:

    You don’t even need to invite me over and I already know you live in a crap house, because unless you can afford Rivermark, you almost certainly live in a crap house.

    Oh, there is no doubt that I live is a crap house. Not just mine, many houses in SV are actually crap houses – even if someone agreed to pay millions for an one car garage property located at the Wrong Side of Middlefield.

    Regarding Rivermark. Personally I don’t like the area. It’s an residential island in the middle of industrial area.

  57. DreamT Says:

    Pralay, in the spirit of friendship, can you just stop being an Indian living in Santa Clara and switch to Chinese living in Palo Alto? I thought Real Estater was pretty clear: your house is about to collapse, your neighborhood is middle-class hell, your food fails the fish test, your clock says 2pm when it’s noon, and you’re genetically unable to do a management job.
    Just accept the red pill already, I mean a Palo Alto Coffee with the Leader. And don’t leave without making multiple offers on his Tracy house.

  58. madhaus Says:

    That’s easy for you to say, #57. When are you going to stop being a French surrender monkey living on edge of middle-class hell? After all, every other school in Santa Clara is for raising cube veal.

    Tell me more about how I can become Chinese and live in Palo Alto. I wasn’t aware that cash on the sidelines was insufficient to buy there. Do I need to get new parents and names too? Also, I have two non-Chinese children with non-Chinese grades. Neither is taking AP classes and both are over age ten! While one studies three musical instruments like a good Chinese student, the other spends all day playing video games just like a non-Chinese. Yes he not only dishonors ancestors, he dishonors other gamers by whomping them.

    They both eat a lot of rice, though. Do you think we could get an H1-B?

  59. DreamT Says:

    #58 – now I feel like having Blanquette

  60. Real Estater Says:

    >>If you bought a Tracy home for “income”, you bought it for wrong reason.

    Really? Buying something with positive cash flow is the wrong reason?

    >>They have no reason to pay rent $2000 in Tracy either.

    They don’t have to. They can rent a newish home for under $2000.

    >>Regarding Rivermark. Personally I don’t like the area.

    The grape is very sour indeed.

  61. Pralay Says:

    Pralay, in the spirit of friendship, can you just stop being an Indian living in Santa Clara and switch to Chinese living in Palo Alto?
    —–

    Switched. Going to Dynasty to eat some seafood.

  62. Real Estater Says:

    >>Pralay, in the spirit of friendship, can you just stop being an Indian living in Santa Clara and switch to Chinese living in Palo Alto?

    Are you kidding? In the spirit of friendship, he won’t even come to Palo Alto for free coffee.

  63. Real Estater Says:

    >>Tell me more about how I can become Chinese and live in Palo Alto.

    Wrong city. The place to be Chinese is Cupertino. Since you are already in CUSD, just stay where you are.

  64. Real Estater Says:

    >>Switched. Going to Dynasty to eat some seafood.

    The switching part is easy. The hard part is eating seafood.

  65. Pralay Says:

    >>If you bought a Tracy home for “income”, you bought it for wrong reason.

    Really? Buying something with positive cash flow is the wrong reason?
    ——

    Your statements are based on the assumption that the world revolves around your opinion.

    Five words: Floor of rentals in Tracy.

  66. Real Estater Says:

    >>Your statements are based on the assumption that the world revolves around your opinion.

    Wrong again. It’s not based on any opinion, but based on checks in the bank.

  67. Pralay Says:

    Wrong again. It’s not based on any opinion, but based on checks in the bank.
    —–

    Useless unverified data.

  68. SEA Says:

    “Most properties there rent in less than a month, because it is a great deal to live in a newish house for what amounts to apartment rent in the Bay Area.”

    Remember: When something is low in price, there’s always a market.

    What you do is buy a place today and compete with the existing landlords by undercutting them.

    Do you want to be the landlord or the renter in that type of market?

  69. Pralay Says:

    >>Regarding Rivermark. Personally I don’t like the area.

    The grape is very sour indeed.
    —–

    Why would someone want to rent in Rivermark unless he/she works in that specific area (and I don’t)?

    Grocery? Go to Milpitas or drive down to El Camino. Oh, yes I forgot there Safeways in Rivermark.

    Restaurant? Baja Fresh and Quiznos in Rivermark.

    Overall, great options.

  70. Pralay Says:

    In the spirit of friendship, he won’t even come to Palo Alto for free coffee.
    —-

    Yesss. “Free coffee”. I am so excited!!!! :)

  71. Real Estater Says:

    >>Useless unverified data.

    How about this: Come to coffee, and I’ll show you the check. Got the incentive now?

  72. Real Estater Says:

    >>hy would someone want to rent in Rivermark unless he/she works in that specific area (and I don’t)?

    Are we talking about the same Rivermark? The one where you can walk to work at Sun Microsystems?

  73. nomadic Says:

    Walking to Sun doesn’t do much good if you don’t work there, eh?

  74. Pralay Says:

    The one where you can walk to work at Sun Microsystems?
    —–

    You mean the dying dinosaur that was bought by Oracle?

  75. Real Estater Says:

    >>Grocery? Go to Milpitas or drive down to El Camino.

    Of course, it’s not as convenient as being right next to El Camino where you are.

  76. nomadic Says:

    Speaking of which, are you guys still on holiday? Can’t be getting much work done today…

  77. Real Estater Says:

    Don’t remind me…I gotta go prepare for my board meeting tomorrow.

  78. Pralay Says:

    Walking to Sun doesn’t do much good if you don’t work there, eh?
    —–

    I think when he said “sour grapes” he meant not working for Sun. I mean working in MySQL project and keeping finger crossed that Oracle won’t kick them out soon.

  79. Real Estater Says:

    >>Can’t be getting much work done today…

    Don’t forget. Pralay is the zero value guy. Whoever hired him will get nothing out of him anyways.

  80. Pralay Says:

    I gotta go prepare for my board meeting tomorrow.
    —-

    :) Please tell is if it cardboard meeting or particle-board meeting.

  81. Real Estater Says:

    Can you imagine how much Rivermark will be worth if it were within walking distance to “Face Book”?

  82. DreamT Says:

    I did hear from an Oracle employee that they are consolidating some divisions and acquisitions in these Sun buildings… so while I agree with Pralay’s assessment of Rivermark proper, it would seem like there is still life in the nearby office buildings.

  83. Real Estater Says:

    Pralay,

    Up for coffee to see the rent checks?

  84. Real Estater Says:

    The most valuable part of the Sun acquisition is that beautiful campus, which is within walking distance to Rivermark.

  85. Pralay Says:

    Can you imagine how much Rivermark will be worth if it were within walking distance to “Face Book”?
    —–

    That would be Menlo Park campus. If being within walking distance is the reason, I am pretty sure not living East Palo Alto and North Menlo Park will be “sour grape” thing.

  86. Pralay Says:

    How about this: Come to coffee, and I’ll show you the check. Got the incentive now?
    —–

    You mean you don’t deposit checks in bank? That does not sound like an “income”. :)
    Photocopy? That you can send it to Burbed to verify anyway. In any case, why do you call it “incentive”. Should I consider seeing your 50 year old post-middle-age big belly an “incentive” too?

  87. Pralay Says:

    Pralay is the zero value guy. Whoever hired him will get nothing out of him anyways.
    —–

    A post-middle-aged guy posting comments on Burbed from home does not sound like much value either.

    Oh, yes, he has a cardboard meeting tomorrow (and he did not forget to mention it here). :)

  88. Pralay Says:

    Speaking of which, are you guys still on holiday? Can’t be getting much work done today…
    —–

    Well, this is January. Before I start packing my stuffs and going to vacation, I am keeping him busy, before he starts missing me, like last year and year before.

  89. Real Estater Says:

    >>You mean you don’t deposit checks in bank? That does not sound like an “income”.
    Photocopy? That you can send it to Burbed to verify anyway.

    Do not worry about low level details. You want to be there in person so you that can lick it. Got any more excuses?

  90. madhaus Says:

    #71 is not going to show you actual rent check, #86. After all, that would be meaningless anecdotal data. Instead he will show you healthy Tracy rental market and tell you house in question is in similar neighborhood.

    The solution to getting a tenant in 3 weeks in a glutted market is indeed undercutting. So positive cash flow means that rent check covers the mortgage. What he didn’t tell you is mortgage is only $415 because he put 75% down.

  91. Real Estater Says:

    >>Well, this is January. Before I start packing my stuffs and going to vacation

    Don’t forget to visit Star Bucks.

  92. madhaus Says:

    Yes #86 do not worry about low level details such as whether you will see rent check, get free coffee, or when/where to meet.

  93. Real Estater Says:

    >>The solution to getting a tenant in 3 weeks in a glutted market is indeed undercutting.

    It’s easy to undercut when you bought the house at a lower price than existing landlords. It’s like Prop 13 in reverse.

  94. Pralay Says:

    You want to be there in person so you that can lick it. Got any more excuses?
    —-

    Carefully you evaded the second part of #86. Why do you call it “incentive”? Is licking your excretion “incentive” too?
    Apparently it looks like so, at east based on your “reputation” on Burbed.

  95. Real Estater Says:

    >>#71 is not going to show you actual rent check, #86

    I will absolutely show a real rent check, because the check is mailed to my home in the first week of the month, every month. That’s why I want him to come out now. Damn, I hate explaining low level details. That’s always what the worker bees and the women focus on.

  96. Pralay Says:

    Damn, I hate explaining low level details. That’s always what the worker bees and the women focus on.
    —–

    First, comprehending #90 would be appropriate. :)

  97. madhaus Says:

    #95, you hate explaining low-level details because reality has a left-wing bias.

  98. Pralay Says:

    It’s easy to undercut when you bought the house at a lower price than existing landlords.
    —–

    Don’t worry. Some of the “existing landlords”, who are waiting to flip, will go belly-up pretty soon (as a result of your undercutting). Eventually, future landlords will start undercutting you. Remember, it’s like Prop 13 in reverse. :)

  99. Pralay Says:

    Remember, they are not making any more tenants in Tracy. It’s all about who undercuts whom.

  100. Real Estater Says:

    >>Eventually, future landlords will start undercutting you. Remember, it’s like Prop 13 in reverse.

    I thought you said Tracy is suitable for doing a flip? That means prices will be higher in the future. Will you make up your mind?

  101. SEA Says:

    “It’s easy to undercut when you bought the house at a lower price than existing landlords. It’s like Prop 13 in reverse.”

    Think of all those existing landlords that had “positive cash flow from day one.”

    I guess it’s not day one anymore.

  102. Pralay Says:

    I thought you said Tracy is suitable for doing a flip?
    —–

    Comprehension problem? Again. Please find the post where I said so.
    I said there is no rental market in Tracy. What does rental glut for SFH tell you? It just tells that too many investors invested there and most of them are waiting to flip (and renting out is a temporary measure for them).

  103. SEA Says:

    “So positive cash flow means that rent check covers the mortgage. What he didn’t tell you is mortgage is only $415 because he put 75% down.”

    I love all these “cash flow positive from day one” places… It totally ignores day ZERO when the all the owner’s cash suddenly disappeared.

    I guess I could almost suggest buying my new car was “cash flow positive from day one.” I paid all the cash on day zero, and since there’s no more cash flow for the purchase, the negative cash flow is gone.

    Yes, I know there’s other costs involved, such as Drano and light bulbs. Which one would you use if your muffler is plugged?

  104. Real Estater Says:

    >>I guess I could almost suggest buying my new car was “cash flow positive from day one.” I paid all the cash on day zero, and since there’s no more cash flow for the purchase, the negative cash flow is gone.

    Come on, you gotta troll better than this. Are you renting out your car for cash? Any ads in Craigslist to rent out personal vehicles?

  105. Pralay Says:

    That means prices will be higher in the future.
    —-

    Someday in future? Yes. DreamT thinks it is 20 years bet. I agree with him somewhat. I know you hate rentards and think “renting is like a drug habit”, but enjoy dealing with drug-addicts anyway…….for next 20 years.

  106. Real Estater Says:

    >>“So positive cash flow means that rent check covers the mortgage. What he didn’t tell you is mortgage is only $415 because he put 75% down.”

    Actually it’s not a bad idea to pay cash for a Tracy house. You will have income for eternity, and no one will ever be able to undercut you. I would considering going that route if I didn’t also buy a 94306 house.

  107. Real Estater Says:

    >>DreamT thinks it is 20 years bet. I agree with him somewhat.

    Translation: You disagree with him somewhat.

  108. Pralay Says:

    You will have income for eternity, and no one will ever be able to undercut you.
    ——

    Damn, those “existing landlord” investors who paid in cash can undercut Real Estater Undercutter anytime. Looks like it is not really “Prop 13 in reverse”.

  109. Pralay Says:

    >>DreamT thinks it is 20 years bet. I agree with him somewhat.

    Translation: You disagree with him somewhat.
    —-

    Thanks for stating the obvious, Captain Obvious.

  110. SEA Says:

    “Are you renting out your car for cash? Any ads in Craigslist to rent out personal vehicles?”

    If I rented it out “for cash,” every dollar would be cash flow positive.

    I generally don’t rent things out for hookers and blow.

    Why are there not any ads? Probably because all the good deals go quick.

  111. Real Estater Says:

    In summary, here’s the difference between the chief and the Indian:

    The chief gets rent check every month.

    The Indian gives away a flat screen TV every month.

    Meanwhile, the Indian is wondering about what will happen after 20 years? LOL

  112. Pralay Says:

    The chief gets rent check every month.
    —–

    Happy landlording in Tracy. And, yes, happy undercutting (it will be much better once banks start dumping foreclosed properties in market).

  113. Pralay Says:

    The chief gets rent check every month.
    —–

    BTW, you missed one thing. That rent check subsidizes another rentard in 94306. Bustard Palo Alto drug-addict rentard.

  114. madhaus Says:

    Actually it’s not a bad idea to pay cash for a Tracy house. You will have income for eternity, and no one will ever be able to undercut you. I would considering going that route if I didn’t also buy a 94306 house.

    Here’s more investment advice from Captain Obvious.

    If you want to pay off your mortgage and lose your tax shelter as well as access to your cash, that’s your business. Ask any financial planner, it makes zero sense. Once money is paid into the house, it becomes dead money. In order to tap that money, you need to pay the bank high interest rates. It’s way better to keep the money and the house. If you had the cash right now, you could be taking advantage of the historic opportunities to invest in real estate right now, and bring home even more money. Some things are counter-intuitive. That’s why you need to talk to the experts in these areas.

  115. nomadic Says:

    Thanks, madhaus. I didn’t want to look that one up. ;-)

  116. Pralay Says:

    LOL! What I enjoy from Mr Consistent-Track-Record is all the back-fitting explanations why his every post is consistent. There is absolutely no contradiction. I am waiting for his explanation:

    As usual the mad housewife has no clue about investment. Investment is not tampon. That dead money is different from this dead money. In Tracy dead money is not exactly dead money anyway. They are undead – like dracula. I have lot of extra cash, so access to cash is not an issue for me. My dad also has some more cash in his pocket. Access to cash is just not an issue for an investor like me. In any case, in Tracy conventional investment model does not apply. Because price is so low there. It’s like Prop 13 for investor there. On the top of that, I am getting a check from renter every month. More access to cash. Oracle setting up shop in Tracy. That means I will have more access to cash through Oracle SQL server. When I have so much cash access, dead money is not an issue.
    ….
    ….
    In any case, mad housewife is a housewife in Sunnyvale. Hence, I am Mr Consistent

  117. Pralay Says:

    Apart from recent “dead money”, some older dead money:

    Final point: Unless you’re in retirement age, you should never pay for your house outright. You would lose the two major benefits of real estate investing: 1)Tax shelter 2)leverage. Having a mortgage is considered “good debt”. It will even improve your credit score.

    Don’t ignore CREDIT SCORE. You should pay interest to bank to increase your credit score.

    Regarding tax shelter, yes, you must pay more to bank. More you pay to banks, bigger tax shelter you get.

  118. Real Estater Says:

    >>Thanks, madhaus. I didn’t want to look that one up.

    Look at that. An amateur cheering up another amateur, without understanding the context. Ever heard of the mortgage deduction limit? Once it’s exceeded, you cannot deduct anyways. Thus, if you have cash on the sidelines, paying all cash would not make a difference from a tax perspective. Madhaus is obviously nowhere near that limiit, thus my previous comment to her is fully valid.

  119. Real Estater Says:

    >>I am waiting for his explanation

    Dumb Pralay got his explanation. I’m still waiting for him to accept the coffee invitation.

  120. Real Estater Says:

    Poll time! Which is harder:

    1. Getting Pralay to come to the coffee shop
    2. Getting a date from Gwyneth Paltrow

    Hint: We all know which one is not worth the effort.

  121. Real Estater Says:

    Addendum to #118, for those who cannot think for themselves: Yes, I am above the limit with my 3 houses.

  122. SEA Says:

    Do you think Donald Trump has hit his “mortgage deduction limit” with all his properties?

  123. Pralay Says:

    without understanding the context. Ever heard of the mortgage deduction limit?
    —-

    See, you guys got the explanation from Mr Consistent. When deduction limit reaches, dead money is no longer dead money.

    And don’t forget that he is going to deduct mortgage from his 2 qualified investment properties too.

  124. nomadic Says:

    Ever heard of the mortgage deduction limit?

    Mr. Tax Expert (ROFL) – that is, Real Estater – has it occurred to you that the tax treatment for mortgage deductions is completely different for rental properties than it is for a primary residence? Hmmm?

    Too bad WG isn’t here to school you on the basics. I’m not going to bother. Consult your tax adviser.

  125. Real Estater Says:

    nomadic,

    All loans, whether secured by your main home or your second home, are subject to the same overall limitations.

  126. Real Estater Says:

    >>See, you guys got the explanation from Mr Consistent. When deduction limit reaches, dead money is no longer dead money.

    When the deduction limit is reached, that means you have maximized your tax shelter. Just like maximizing your 401K, that’s a good thing.

    Of course, what does it matter to you anyways? Your objective is to minimize your shelter (as in zero) and maximize wasted money by renting in one of the most expensive rental markets around.

  127. Pralay Says:

    Addendum to #118, for those who cannot think for themselves: Yes, I am above the limit with my 3 houses.
    —–

    I am hoping I will hear another hilarious tax issue in April this year.

  128. Pralay Says:

    All loans, whether secured by your main home or your second home, are subject to the same overall limitations.
    —-

    Correction: Qalified second home.

    In any case, keep back-fitting. Explanation like “record year” income (for AMT problem) is entertaining.

  129. Real Estater Says:

    Unfortunately, I don’t have a “Qalified” home. Where can I find such a home?

  130. nomadic Says:

    #125, you’re very confused. Consult your tax adviser.

  131. Tuno Says:

    #14 – you can freeze tofu, madhaus. just as you can freeze milk. actually tofu is better after freezing; after you thaw it and squeeze it dryish, it’s chewy instead of creamy. monks in Chinese monastaries in the mountains used to freeze tofu, both to preserve it and to improve its texture.

  132. Pralay Says:

    Mr. Tax Expert (ROFL) – that is, Real Estater – has it occurred to you that the tax treatment for mortgage deductions is completely different for rental properties than it is for a primary residence?
    —-

    That’s why I seriously doubt he did any investment anywhere – whether it is Tracy or Palo Alto.

  133. nomadic Says:

    True, Pralay, but he’s ignorant a newbie. And it’s fun to play along. :-)

  134. Pralay Says:

    And it’s fun to play along.
    —-

    Agreed. It also allows us to bring Tracy reference more often. :)

  135. nomadic Says:

    PS, genius, a “second home” should not be confused with an investment/rental property.

  136. madhaus Says:

    You’re right, Pralay. I don’t think he had a Chinaman’s chance of having bought any investment property in Palo Alto. Or Tracy.

    Cupertino, perhaps?

  137. madhaus Says:

    Since you wanted Mr. Maximum Mortgage Deduction to consult his tax advisor, I’ve obtained a Certified Expert.

    Q: What are “capital gains”? How can I tell if I have them?

    A: This requires a urine test.

  138. Real Estater Says:

    >>That’s why I seriously doubt he did any investment anywhere

    Why doubt? Just come to the coffee shop and I’ll show you the check. I seriously doubt your manhood…of course we knew that from before.

  139. madhaus Says:

    Watch out, incoming tampon joke.

  140. Real Estater Says:

    >>hould I consider seeing your 50 year old post-middle-age big belly an “incentive” too?

    No curry no belly. Again, that’s another thing you can verify. All you have to do is come (oops, that’s easier said than done for Pralay).

  141. Real Estater Says:

    >>You’re right, Pralay. I don’t think he had a Chinaman’s chance of having bought any investment property in Palo Alto. Or Tracy.

    Here we go again. I’m actually living in a trailer in the Midwest, remember?

  142. madhaus Says:

    So you will send Steve Jobs to meet Pralay at Star Bucks for you?

  143. Pralay Says:

    Watch out, incoming tampon joke.
    —-

    I don’t think he is not very good mood for joke. How dare we doubt Mr Consistus Maximus Mortgatus Deductus.

  144. DreamT Says:

    “All you have to do is come” said someone very much in a hurry to do so

  145. SEA Says:

    When I need professional tax advice, I come here to learn about tax evasion.

    My second choice for quality tax advice? about.com

  146. Pralay Says:

    “All you have to do is come” said someone very much in a hurry to do so
    —-

    He had to do it fast, before IRS finds him.

  147. Pralay Says:

    My second choice for quality tax advice? about.com
    —-

    Actually that’s the first thing he found when he googled.
    You know, he just bought two investment properties today, just few minutes back. Then he started googling about his maximus deductus.

  148. Real Estater Says:

    >>My second choice for quality tax advice? about.com

    What you really need is “qality” tax advice.

  149. SEA Says:

    I’d love to hear some tax advice from our Tax Expert regarding farming deductions!

  150. Real Estater Says:

    >>I don’t think he is not very good mood for joke.

    Translation: I think he is in a good mood for joke.

    (This translation is no joke)

  151. SEA Says:

    From the link in #128- “The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.

    Maybe “main home” and “second home” needs to be very carefully defined? Is it simple enough to suggest that the property you rent out and never occupy is not a main or second home?

    Maybe Mr. Tax Expert can explain it all to us?

  152. madhaus Says:

    I’ve already asked Mr. Tax Expert to send in some guest columns, but he has elected to entertain everyone in real time instead.

    Did you know that there’s a little-known IRS ruling that buying investment property during the month of December no longer qualifies for deductions that year? It’s quite complex, but it turns out if you closed on the property after December 13th of any given year, you are SOL, they consider it the real estate equivalent of a washday sale.

    Consult your tax advisor for more details.

  153. Real Estater Says:

    >>He had to do it fast, before IRS finds him.

    LOL. DreamT, it sounds like he doesn’t have a clue. No wonder those vacations haven’t done him any good.

  154. Real Estater Says:

    >>Did you know that there’s a little-known IRS ruling that buying investment property during the month of December no longer qualifies for deductions that year?

    Doesn’t matter. My homes weren’t bought in December.

  155. Real Estater Says:

    madhaus says,
    >>I’ve already asked Mr. Tax Expert to send in some guest columns, but he has elected to entertain everyone in real time instead.

    You’re giving me too much credit. The real entertainment is from Pralay. Let’s see when he will COME back.

  156. Pralay Says:

    What you really need is “qality” tax advice.
    —-

    That’s more burbed-ized way to end the the tax talk, while keeping the reputation intact. :)

    Meanwhile, let me try Real Estater way:

    The qality by definition, bla bla bla? Don’t be a Pralay, OK?

  157. madhaus Says:

    #151, I think Mr. Tax Expert has Expertly covered that problem by renting both homes out to two families each. The problem is that means one of each pair shouldn’t be paying with checks, and it also sets up the possibility of a nasty falling out between landlord and tenant. Mr. Tax Expert’s best practices here would be to ensure the second family are illegal immigrants who rarely seek any form of legal recourse.

  158. madhaus Says:

    #154, that refers to closing dates, not accepted offer dates. You did make sure you recorded in advance of the cut-off, right?

  159. Real Estater Says:

    >>#154, that refers to closing dates, not accepted offer dates. You did make sure you recorded in advance of the cut-off, right?

    By that time I was making sure my tenant was sending the checks.

  160. Pralay Says:

    I’ve already asked Mr. Tax Expert to send in some guest columns,
    —-

    Well, I guess he is too busy for cardboard/particle-board meeting. On the top of that, his fingers are tired after signing NDS.

  161. DreamT Says:

    #158 – Residing in Palo Alto, I’m sure Real Estater has access to quality counsel from top real estate agents, and will have avoided any such pitfall. Our realtor (from Palo Alto) did indicate that different closing dates come with their own quirks.

  162. Pralay Says:

    The real entertainment is from Pralay. Let’s see when he will COME back.
    —-

    So I am assuming Real Estater is going to write a guest column while I am away. Yippppy!

  163. SEA Says:

    And don’t try and divorce one year and remarry the next for the sole purpose of reducing taxes…

    (see Revenue Ruling 76-255)

  164. Real Estater Says:

    Still clueless. This keeps getting better.

  165. madhaus Says:

    #159, only one tenant? But you said you purchased two homes! Does that mean one of them is sitting vacant while you throw mortgage checks out the window?

  166. Real Estater Says:

    SEA,

    The best way to save taxes was to die last year.

  167. SEA Says:

    So now we should die for the sole reason to “save taxes?” That’s about as absurd as spending $1 on mortgage to save far less.

  168. Pralay Says:

    That’s about as absurd as spending $1 on mortgage to save far less.
    —-

    Didn’t you mention “spave”?

  169. Pralay Says:

    Does that mean one of them is sitting vacant while you throw mortgage checks out the window?
    —-

    Other one he is getting in cash. And he can show me that cash too, in coffee shop.

  170. SEA Says:

    The best spavings are found right after Christmas!

    Spend $1 and spave $9!

    The tax code cannot compete with that.

  171. Real Estater Says:

    DreamT says,
    >>Our realtor (from Palo Alto) did indicate that different closing dates come with their own quirks.

    You used a Palo Alto realtor to buy a house in Santa Clara? Isn’t that overkill?

  172. madhaus Says:

    No, overkill would be buying a house in Palo Alto and then encouraging everyone else to buy a house in Tracy.

  173. DreamT Says:

    We used her to sell our MV condo, and she did a spectacular job. Since we were satisfied with her, we kept her for the house purchase (we were hesitating between Redwood City hills and MV/Sunnyvale/Santa Clara). As for overkill, that would have been her decision to make, wouldn’t it? And in case you hadn’t realized, this profession thrives on referrals.

  174. Real Estater Says:

    DreamT,

    I can tell you there’s a huge difference between a professional realtor from one of the major Palo Alto offices vs. a realtor from another places. That’s because they are groomed to serve executive clients. You really get the VIP treatment from them. In addition to the service, knowledge, experience, and negotiation skills, the office you get to sit in is a nice treat as well.

  175. Real Estater Says:

    I can see it coming. Pralay is going to joke at the “professional realtor” term. That’s because he has never dealt with one. It’s like the difference between being served by an Indian body shop vs. a management consulting firm.

  176. Real Estater Says:

    OK guys, I just finished my presentation for tomorrow. Gotta go for now so I can be on my game at the board meeting tomorrow.

  177. Pralay Says:

    I can see it coming. Pralay is going to joke at the “professional realtor” term.
    —–

    Don’t confuse yourself with SV Shopper. I know it is difficult. But that joke is specifically reserved for SV Shopper, with same IP address though.

  178. Pralay Says:

    Gotta go for now so I can be on my game at the board meeting tomorrow.
    —-

    Thanks for mentioning. Otherwise we would have mistakenly thought of you as some low level tech guy. You still haven’t told us if this is cardboard meeting or particle-board meeting.

  179. DreamT Says:

    RE – Her 20+ years experience selling around P.A. allows her to succeed without much “grooming”, I suspect…
    We had a Sunnyvale agent back in 2002 and we were happy with him as well, but by 2005 he had vanished somehow :)

  180. nomadic Says:

    You really get the VIP treatment from them. In addition to the service, knowledge, experience, and negotiation skills, the office you get to sit in is a nice treat as well.

    For such a “worldly” guy, you sure get off on some of the weirdest things.

    .
    The problem with some people, is that the don’t know what they don’t know and aren’t bright enough to ask the right questions. SEA was gracious enough to home in on the crux of RE’s problem in #151. Better guidance could even be found on about.com if you look in the right place.

    .
    #163, I know a couple who is seriously considering getting a divorce to save on taxes. They have two small children and I’m pretty sure they’re happy together.

  181. RentalPropertyTaxExpert Says:

    The problem with some people, is that the don’t know what they don’t know and aren’t bright enough to ask the right questions.
    —-

    These amateurs and rentards have no clue. Rental property is my second home, OK? That’s how I calculated deduction. Dead money in Tracy is not dead money.

  182. Real Estater Says:

    >>. Better guidance could even be found on about.com if you look in the right place.

    Good move! The article says absolutely nothing about maximum deduction.

  183. RentalPropertyTaxExpert Says:

    The article says absolutely nothing about maximum deduction.
    —–

    That’s right nomadick. You just don’t understand all the complicated tax issues related to rental property. No wonder you don’t live in Palo Alto and cannot afford to enjoy sitting inside Palo Alto realtor’s office.
    The article talks about rental cash flow, depreciation calculation, tax liability, but it does not say anything about maximum deduction. That’s why Real Estater decided to treat his rental property as second home and get maximum deduction. It is as simple as that. Got it, nomadick?

  184. Real Estater Says:

    DreamT says,
    >>RE – Her 20+ years experience selling around P.A. allows her to succeed without much “grooming”, I suspect…

    What you typically find is that, there’s a reason someone is in PA.

  185. Real Estater Says:

    >>The problem with some people, is that the don’t know what they don’t know and aren’t bright enough to ask the right questions.

    Let me paraphrase. The problem with some people is that they don’t know they need help. That’s why they pay rent, pay taxes on full income, go on vacation, and wonder why don’t have any money.

  186. RentalPropertyTaxExpert Says:

    That’s why they pay rent, pay taxes on full income, go on vacation, and wonder why don’t have any money.
    —-

    Going to vacation, instead of talking about it – that’s just another advantage of not buying an overpriced one car garage home at the Wrong Side of Middlefield.

  187. nomadic Says:

    #182. Wow. You are really thick.

    This article (http://money.cnn.com/2011/01/05/pf/taxes/IRS_tax_study/) says Americans spend over 6 billion hours doing their taxes each year. I think half of that time is just Real Estater trying to figure his AMT and maximum deduction.

  188. madhaus Says:

    #182, I hope you were paying attention to IRS regulations that concern acquisitions made to evade or avoid income tax.

    Yep, a whole section just for you. (TITLE 26, Subtitle A, CHAPTER 1, Subchapter B, PART IX, § 269)

  189. RentalPropertyTaxExpert Says:

    It’s very entertaining when a mad housewife lectures about tax. I just gave a presentation on “TITLE 26, Subtitle A, CHAPTER 1, Subchapter B, PART IX, § 269” in my motherboard meeting today. Senior management so was impressed that I got another double-digit bonus and half million sock options immediately.

  190. Real Estater Says:

    Nomadic says,
    >>Wow. You are really thick.

    Am I thick, or did you fall off your high chair?

  191. nomadic Says:

    double-digit bonus (like $50?) and half million sock options immediately. (That’s a LOT of socks!)

  192. Real Estater Says:

    >> I hope you were paying attention to IRS regulations that concern acquisitions made to evade or avoid income tax.

    I always fully comply with all tax regulations. I’m actually very, very “thick” on these matters. My payment for estimated tax is going out on the 18th.

  193. RentalPropertyTaxExpert Says:

    I always fully comply with all tax regulations. I’m actually very, very “thick” on these matters. My payment for estimated tax is going out on the 18th.
    —–

    Good. Someone learned about estimated tax.

    See, he even can tell the exact date of 4th quarter ET. Now everyone is convinced that Real Estater knows something about tax. Any doubter?

  194. nomadic Says:

    I’m actually very, very “thick” on these matters.

    I’m glad we agree on something today.

  195. madhaus Says:

    Wow. New IRS ruling excludes mortgage interest deduction to homeowners who refinance too often. Don’t worry, though, as long as your total mortgages are under $637,500 it doesn’t apply. But it is retroactive for entire 2010 tax year.

    How often is too often? If you refinanced twice this year, you better consult your RealEstateTaxExpert.

    This must be first trial balloon in eliminating the mortgage interest deduction completely.

  196. Tuno Says:

    RE, they may be making fun of you, but they are right that it seems that you may hold very inaccurate views re taxes on rental properties. You might want to find out if that is the case. By checking with someone who has the training to give you a truly accurate answer. E.g. a real, live CPA.

  197. Real Estater Says:

    >>Wow. New IRS ruling excludes mortgage interest deduction to homeowners who refinance too often. Don’t worry, though, as long as your total mortgages are under $637,500 it doesn’t apply.

    Correction. Only the amount exceeding $637,500 would not be deductible. Once again you’re making a big deal out of nothing.

  198. Real Estater Says:

    Tuno,

    Don’t be taken by these guys. They jumped all over the AMT thing even though none of them make enough to trigger it. This place can be like a circus and there’s no shortage of clowns.

    There’s no need to see a CPA. Once Turbo Tax arrives just plug everything in and everything will become clear.

  199. anon Says:

    Yeah, RE. You need help. Lots of it.

    Here’s a free tip: You should do your taxes before the end of the year so that you can determine what to do while you can still do it. Some things can be done the following year such as the funding of an SEP, IRA, etc but not all.

    If you had your shit together you’d have done your taxes several weeks ago. Seriously.

  200. RentalPropertyTaxExpert Says:

    They jumped all over the AMT thing even though none of them make enough to trigger it.
    —–

    That’s right Tuno. Unless you paid AMT (although he is not sure whether you paid AMT or not), you would not understand Real TaxExpert’s tax problem. A Lewis tried to point out (one more here), but Real TaxExpert insisted that his tax problem is real problem.

    Here my favorite quotes from hilarious AMT problem:

    First:

    Given the dual tax system with AMT, and the misleading promise by the Obama administration to get rid of AMT, it’s virtually impossible to figure out how much my tax liability is going to be until I plug in the complex set of income and deduction numbers into Turbo Tax.

    That’s right folks. Obama promised something and that’s why Real TaxExpert had tax problem.

    Second:

    You’d never understand unless you’re in my situation. It’s lonely at the top (tax bracket)!

    Poor lonely TaxExpert. Nobody understand his situation. :(

    And my favorite:

    Looks like all the smart people are out giving tax advice! Only wish they’re smart enough to actually have a tax problem!

    That’s right folks. Unless you tax problem, you are not smart enough. :)

  201. RentalPropertyTaxExpert Says:

    Once Turbo Tax arrives just plug everything in and everything will become clear.
    —–

    Hopefully 2010 TurboTax won’t have that many bugs like 2008 TurboTax.

  202. SEA Says:

    A quick fix:

    There’s no need to see a CPA REALTOR.

  203. DreamT Says:

    lol – SEA giving out free unwarranted advice – just like Real Estater

  204. Real Estater Says:

    anon,

    Didn’t you see that I’m already paying estimated tax? How do you think I estimated it?

    You tip is worth its cost; I can say that much :-)

  205. SEA Says:

    And, right along with not using any CPA or REALTOR, I definitely recommend pulling your own teeth.

    And when the plumbing needs work, use Drano.

  206. SEA Says:

    #204 It’s a good thing you don’t have to pay what it’s worth. I suspect you’d have to file bankruptcy.

  207. Real Estater Says:

    SEA,

    Are you saying you have difficulty using Turbo Tax?

  208. SEA Says:

    I’m saying I pay a licensed professional. I’m not saying that Turbo Tax is bad, but my preference is to use the services of a trained, licensed professional that understands the tax code and can maximize the level of tax avoidance given essentially the same outcome.

    How about this one real example: I was given a $250 discount on a product if I completed a survey.

    Is that income? Ask Turbo Tax and let me know the reply.

  209. anon Says:

    “anon,

    Didn’t you see that I’m already paying estimated tax? How do you think I estimated it?

    You tip is worth its cost; I can say that much :-)

    You’re so silly, RE. If you have estimated your taxes already why didn’t you send out your estimated taxes in 2010?

  210. madhaus Says:

    I think #207’s problem is that he has been using Boxster Tax.

  211. anon Says:

    SEA, if you go to the mall and get something on sale, is the difference between the sale price and the MSRP income?

    heh heh…

    Does your answer change if you buy the item? :)

  212. SEA Says:

    anon- Are you suggesting that discount coupon is not taxable income?

  213. madhaus Says:

    Why would it be? It’s the seller giving you an incentive to buy something. You know, spaving.

  214. Real Estater Says:

    anon says,
    >>You’re so silly, RE. If you have estimated your taxes already why didn’t you send out your estimated taxes in 2010?

    I’d advise you to not call another person silly, because if you knew how dumb your comment is, you wouldn’t be here right now.

    Now, listen to this, carefully. The Estimated Tax for 2010 consists of 4 payments; one per quarter. The last payment for 2010 (for Q4) is due on 1/18/2011.

    Got that? Looks like there are 3 tiers of income:

    Tier 1 – Those with AMT
    Tier 2 – Those without AMT but pays Estimated Tax
    Tier 3 – Those without AMT and don’t need to pay Estimated Tax

  215. SEA Says:

    The reply from my tax attorney was:

    If you are not required to perform any service or work for the discount, not taxable income.

    If you are required to perform some work, no matter how small, then it’s taxable.

    Thus if the only way to obtain the discount is to perform the survey, which requires time, then yes, it’s taxable.

    Basically if you are paid $250 to fill out a survey, it’s taxable.

  216. madhaus Says:

    I can see the IRS auditing you right now, and asking why you only paid $39 for Boxster Tax. “I got a discount because I clicked a link on an email.”

    “How long did that take you?”

    “Oh, about five seconds.”

    “That was a taxable discount. You owe us taxes on $50, plus penalties of $79,475.”

  217. SEA Says:

    That link doesn’t require any additional work beyond accepting the offer. You can simply accept the offer at price $X.

    If it says take our survey and we’ll discount the product by $50, then it’s taxable.

  218. SEA Says:

    The underlying issue, however, remains: That tax software is not nearly as animated as a good tax attorney, at least in my opinion.

    I’m sure it will get the job done for many people, but I would not suggest it for anyone with a moderately complex return. And would you use it if you cannot decide if your rental property is your first or second home?

  219. DreamT Says:

    some people speak for a living. Is a verbal acceptance of a discount equivalent to work?
    by the way I just finished a (verbal) survey. It was my son asking me a question about tomorrow. I’ll have to remember to bill him for my time, in case I get an audit.

  220. Real Estater Says:

    SEA,

    If one buys a house for below asking, is it necessary to pay tax on the saving?

  221. DreamT Says:

    I’m actually surprised that RE uses software to compute his taxes. It’s much easier to blame a bunch of bones than a bunch of bits.

  222. anon Says:

    RE says:
    I’d advise you to not call another person silly, because if you knew how dumb your comment is, you wouldn’t be here right now.

    Now, listen to this, carefully. The Estimated Tax for 2010 consists of 4 payments; one per quarter. The last payment for 2010 (for Q4) is due on 1/18/2011.

    Got that? Looks like there are 3 tiers of income:

    Tier 1 – Those with AMT
    Tier 2 – Those without AMT but pays Estimated Tax
    Tier 3 – Those without AMT and don’t need to pay Estimated Tax”

    You’re right, RE. Silly isn’t the right word. Let’s try to find a better one. While I have no idea why you saw a need to tell me that estimated tax is paid through 4 quarterly payments (maybe this is newly-discovered information for you?) I would like to thank you for calculating the date on which your fourth quarter estimated income is due. You even took into consideration MLK day. Great work. No doubt you are proud that you are able to do what any person with a computer would also be able to do.

    Let’s get to the meat of the matter. Why didn’t you pay your estimated taxes already? Deductions do you no good? Do you like to defer losses?

  223. SEA Says:

    “some people speak for a living. Is a verbal acceptance of a discount equivalent to work?”

    It’s not based on any occupation, but rather, if one is compensated for some work. The is no taxable income in simply accepting an offer, including coupons that require no additional work.

    “It was my son asking me a question about tomorrow.”

    If your neighbor offers you $50 to answer a question, and you are paid $50 to answer that question, just like every other professional, it’s taxable income.

  224. SEA Says:

    “If one buys a house for below asking, is it necessary to pay tax on the saving?”

    If you are required to perform some work at another person’s direction to get that deal, then yes. If you simply offer $X, then no.

  225. SEA Says:

    Also note how there is no “savings.”

    In the first case, where you do work to get a lower price, you pay $X in cash plus $Y in labor.

    In the second deal, the home was only worth $Z.

  226. anon Says:

    SEA says:

    “The reply from my tax attorney was:

    If you are not required to perform any service or work for the discount, not taxable income.

    If you are required to perform some work, no matter how small, then it’s taxable.

    Thus if the only way to obtain the discount is to perform the survey, which requires time, then yes, it’s taxable.

    Basically if you are paid $250 to fill out a survey, it’s taxable.”

    SEA, are you sure of this? Income is all income from whatever source derived. Royalties are taxable and they don’t require work or service. Same with an annuity… discharge of indebtedness, etc etc.. Even a gift is “taxable”…

  227. SEA Says:

    Correction:

    In the second deal, the home was only worth $X.

  228. SEA Says:

    anon- Coupons, where no work is performed at the other parties direction, are not taxable.

    If you perform work for a discount, it’s taxable.

  229. madhaus Says:

    Wait, Mr. Tax Expert, this is getting complicated. What if I just want to use Boxster Tax to pay my Estimated Taxes? I was very clever and paid my Estimated Taxes in 2010… for California. Because California is deductible from Federal. But Federal Estimated Tax payment is deductible from nowhere except my bank account.

    However, I seem to owe AMT. I don’t know why I am so surprised by this, because I have owed AMT every year since 1984, but wouldn’t you know it, I owe AMT again.

    How hard can I slug the President?

  230. DreamT Says:

    SEA – I suppose a smile wouldn’t qualify as compensation for my neighbor (phew). A handshake, probably not either. A 10-minutes chat with some advice back, probably not (although the head of the IMF, Mr. 603000, might disagree with that). How about hard goods? Sugar, salt and pepper? the loan of a rake? How about access to a valuable resource or person?
    My point is that your example stops being trivial once you substitute $50 with less tangible “compensation”.

  231. anon Says:

    “Wait, Mr. Tax Expert, this is getting complicated. What if I just want to use Boxster Tax to pay my Estimated Taxes? I was very clever and paid my Estimated Taxes in 2010… for California. Because California is deductible from Federal. But Federal Estimated Tax payment is deductible from nowhere except my bank account.”

    Damnit Madhaus, that’s what I was getting at with real estater but he was too stupid to realize it.

  232. RentalPropertyTaxExpert Says:

    I think #207’s problem is that he has been using Boxster Tax.
    —–

    That’s because Boxter Tax never paid AMT. How would it understand Real Estater’s Real tax problem.

  233. madhaus Says:

    Also what if I fill out a survey and doing so triggers AMT? Then what? Should I shove the survey up #220’s house saving?

  234. SEA Says:

    Smiles are not taxable income.

    :-):-):-):-):-):-):-):-):-):-):-)

    That said, I’m a bit curious, what kind of labor do you request of your neighbor in exchange of sugar, salt and pepper?

  235. anon Says:

    “anon- Coupons, where no work is performed at the other parties direction, are not taxable.

    If you perform work for a discount, it’s taxable.”

    SEA, can you point to the part of the tax code that supports this? It’s income for the fair market value of the work performed. Put another way, if you do someone’s taxes (a $500 service) to get a discount of $30,000 on a $100,000 Ferrari, you didn’t suddenly perform $30,000 worth of services. You bought a Ferrari for $70,000 and you performed $500 worth of services. Meaning – your income from that transaction is… $500.

  236. RentalPropertyTaxExpert Says:

    Now, listen to this, carefully. The Estimated Tax for 2010 consists of 4 payments; one per quarter. The last payment for 2010 (for Q4) is due on 1/18/2011.
    —–

    See, anon. Real Estater knows quarterly ET dates!!!!! Now, could you just accept that Real Estater is a tax expert?

  237. SEA Says:

    anon- Who sets the market rates for taxes?

  238. madhaus Says:

    I sure hope you didn’t buy the $100,000 Ferrari. That’s going to trigger AMT, you know. Or maybe second home mortgage deduction limit.

  239. anon Says:

    Now now, pralay. To be fair, calculating dates like that is something to be entrusted to only the sharpest entry level… worker bee.

  240. DreamT Says:

    #234 – You’re not following me. Restating more formally: a chat or advice can qualify as service rendered (just like filling out a survey) with compensation either negotiated or willingly granted, and that compensation may not be monetary (could be a loan or access to resources & people).

  241. SEA Says:

    You’re right I didn’t follow: Loans are not taxable income.

  242. anon Says:

    Forgiven ones are.

  243. DreamT Says:

    SEA, unless your point in #223 as hinted in #234 is that only pre-negotiated compensation is taxable? But as anon pointed out, that’s wrong – gifts are also taxable.

  244. Real Estater Says:

    >>I’m actually surprised that RE uses software to compute his taxes. It’s much easier to blame a bunch of bones than a bunch of bits.

    All they’re doing is data entry into a Turbo Tax equivalent. There is nothing they can do that you cannot do, and there are things you can do that they cannot do :-)

  245. DreamT Says:

    SEA – So, aside from monetary compensation, what other form of compensation is taxable? Is the government only “allowed” to tax on exchange of its own currency? I know there’s more than just that.

  246. Real Estater Says:

    madhaus says,
    >>I sure hope you didn’t buy the $100,000 Ferrari. That’s going to trigger AMT, you know.

    That’s not the problem. The problem is that a $100K Ferrari is going to need work, just as a $1M Palo Alto house is going to need work.

  247. SEA Says:

    There are many types of taxable income, and one is when you work and get compensated.

    If you get compensated for filling out a survey, it’s taxable.

    If you find a coupon that does not require any work and you use it, there’s no taxable income.

    Two factors regarding the survey discount:

    1. Work
    2. Compensation

    If you fill the survey out and don’t buy the product, no taxable income.

    If you fill the survey out and don’t use the discount, no taxable income.

    If you are not required to fill the survey out, but do so anyway, no taxable income.

  248. RentalPropertyTaxExpert Says:

    To be fair, calculating dates like that is something to be entrusted to only the sharpest entry level… worker bee.
    ——

    That’s not fair. He is managing megaaaaaaaaaaaaaaaaa project. He had cardboard meeting today (do you have have comprehension problem that you did not understand his posts?). He signed a NDS two years back. Don’t insult him calling as worker bee.

  249. anon Says:

    “That’s not the problem. The problem is that a $100K Ferrari is going to need work, just as a $1M Palo Alto house is going to need work.”

    That’s right. And who wants to spend a million dollars on garbage?

  250. SEA Says:

    Hopefully that Palo Alto house won’t have a garage so you can park your Ferrari out in the street.

  251. madhaus Says:

    Plus, Palo Alto house only has one-car garage, so $100,000 Ferrari must be parked on street.

  252. SEA Says:

    At least we agree on something.

  253. madhaus Says:

    Were we disagreeing? I was just worried if we kept talking you’d trigger my AMT again.

  254. Real Estater Says:

    >>That’s right. And who wants to spend a million dollars on garbage?

    Someone who wants to gain some sweat equity?

  255. Real Estater Says:

    >>Plus, Palo Alto house only has one-car garage, so $100,000 Ferrari must be parked on street.

    What??? Is math really that hard?

  256. madhaus Says:

    You silly. I parked the Murciélago in the garage. Geez, some people.

  257. madhaus Says:

    Oh, and some free tax advice, #197. You’re wrong about the amount exceeding $637,500. This is a hard ceiling. Consult your tax advisor… if you can afford one.

  258. anon Says:

    “>>That’s right. And who wants to spend a million dollars on garbage?

    Someone who wants to gain some sweat equity?”

    That’s sweet equity, RE and there is no such thing. It’s all a ploy to induce people to live lives of indentured servitude.

  259. Tuno Says:

    Gifts are not taxable to the *recipient*. The gift tax is applied to the *giver* (in certain circumstances). Where have you seen otherwise, anon????

    RE, it seems that you are not distinguishing between residences, and houses that are purchased strictly to be rented out. They simply must be treated differently. If pure rentals were subject to the strict deduction limits you’re describing, how would a big time RE investor (say, hundreds of houses) deduct all of his/her expenses? including his/her mortgage expenses?

    I would think that the filling out of a survey would be de minimus; not enough to count as work. but, who am I to argue w/a tax attorney.

    RE makes it sound as if you have to be well-off to be nailed by the AMT. Totally untrue. there are truly middle-class, flyover families, who are nailed by it, because they have a lot of kids.

    You can both use Turbo Tax (I love it), *and* work with a CPA. My FIL does his own taxes, and then he has a CPA give his return a quick look over, to see if he’s missed anything or screwed anything up. It’s much cheaper than having the CPA actually do the return.

    DISCLOSURE: I AM NOT A TAX EXPERT
    FOR REAL GUIDANCE, CONSULT A TAX EXPERT

  260. Real Estater Says:

    >>You’re wrong about the amount exceeding $637,500. This is a hard ceiling.

    Is that your opinion, your interpretation, your guess, or your wish?

    Show the link, taxpert!

  261. Real Estater Says:

    Tuno,

    Let’s get to the point. Can you answer these questions:

    1. What in the world is a FIL?
    2. Is there or is there not a deduction limit for investment/rental property (as opposed to second home)?

  262. Real Estater Says:

    >>RE makes it sound as if you have to be well-off to be nailed by the AMT. Totally untrue. there are truly middle-class, flyover families, who are nailed by it, because they have a lot of kids.

    What you say is true, but my point is the opposite. If you’ve never come across AMT (like a Pralay or anon), you’re surely not making that much. Pralay finds this point “hilarious”. I’m still trying to figure out what triggers that emotion.

  263. Tuno Says:

    RE: Actually, yes, I can answer both questions. however, I shall only answer the first one.

    1. father-in-law
    re #2: consult a tax expert. If you take tax advice from a stranger on a blog, you are insane.

    re post #244: “All they’re doing is data entry into a Turbo Tax equivalent. There is nothing they can do that you cannot do, and there are things you can do that they cannot do.”

    what you are describing is e.g. H&R Block. Yes, they do data entry into a Turbo Tax equivalent. I wouldn’t go to one of those places in a hundred years; they are a waste of money and they don’t employ people who actually know tax law. A CPA, or a tax attorney, is a genuine source of information.

  264. Real Estater Says:

    >>A CPA, or a tax attorney, is a genuine source of information.

    By using them, you have just increased your tax expenses. Unless you are a coporation, I don’t see the value-add above Turbo Tax.

    You can’t answer #2 because you don’t actually know the answer. I’m OK if you just say it that way.

  265. SEA Says:

    #244: “All they’re doing is data entry into a Turbo Tax equivalent. There is nothing they can do that you cannot do, and there are things you can do that they cannot do.”

    All a tax attorney does is data entry? There is nothing a tax attorney can do that you cannot do?

  266. SEA Says:

    “2. Is there or is there not a deduction limit for investment/rental property (as opposed to second home)?”

    To prove there is a deduction limit exists I must find at least one limit.

    This is very easy to show if there is a limit. If there is no limit, it’s a bit trickier, since I need to prove that there is never any case where a limit might exist.

    Let’s take the purchase price. An owner is not allowed to deduct the full purchase price in the year purchased. There is a limit to the maximum deduction.

    Generally individuals are on a cash accounting basis for tax purposes, but in this situation the point of cash flow is divided away from the tax deduction.

  267. madhaus Says:

    #260, consult your tax advisor, as I have already suggested. If your copy of Boxster Tax doesn’t have this limit in it, perhaps next year don’t buy it at Costco.

    My CPA doesn’t use Turbo Tax but something designed by Maserati. What I pay him for is his being up on all the reasons I’m going to get screwed by AMT yet again. Fortunately he can also advise me how to get around it to the best of my ability, but he doesn’t share your enthusiasm for buying as much house as possible, let alone feasible, let alone prudent.

    I doubt you’d have much respect for the guy, being as he lives in the unacceptable confines of Los Alto Hills. He’s got a really cushy office, though, since you seem to get off on that kind of thing.

  268. nomadic Says:

    SEA says: Basically if you are paid $250 to fill out a survey, it’s taxable.

    Does that mean you track everything you buy in other states or online all year and then pay CA sales tax on it when you file your income tax? Just wondering.

    .
    I can’t believe SEA and I have such OBVIOUS hints, and RE still asks the question in #261. Congrats, RE, I’m truly in shock. Good troll, or else you’re beyond help.

    The biggest problem with TurboTax is that if a monkey is answering the questions (like saying “yes” I own a second home when it’s actually rental property), then the results are pure garbage.

  269. nomadic Says:

    All they’re doing is data entry into a Turbo Tax equivalent. There is nothing they can do that you cannot do, and there are things you can do that they cannot do. :-)

    Of course, RE’s message here was that they cannot (ethically) commit tax fraud while he can (unethically). However, he’ll probably be overpaying on his rental fiasco so it’ll work out in the end.

  270. madhaus Says:

    #268, as we observed from last night, #261 is also needlessly throwing money away by paying taxes on January 18th instead of the end of the year.

  271. SEA Says:

    “Does that mean you track everything you buy in other states or online all year and then pay CA sales tax on it when you file your income tax?”

    I suggest maintaining an Oregon residence. :-)

  272. RentalPropertyTaxExpert Says:

    If you’ve never come across AMT (like a Pralay or anon), you’re surely not making that much. Pralay finds this point “hilarious”. I’m still trying to figure out what triggers that emotion.
    ——-

    Paying or not paying AMT is definitely not hilarious. What is hilarious is Real Estater’s amazing effort to convince Burbed readers that he had a AMT tax “problem” and he paid $1000 as a result of that “problem”. :)

    It’s is very apparent that in Real Estater’s mind paying AMT is a measurement for demonstrating “who makes money” and “who does not make money”. And that mentality is evident in his every comment related to AMT issue (including #262).

  273. SEA Says:

    $500,000 is not big money.

    Paying $4,000 per month in mortgage interest? No big deal.

    Paying an extra $1,000 in AMT? BIG MONEY!

  274. RentalPropertyTaxExpert Says:

    2. Is there or is there not a deduction limit for investment/rental property (as opposed to second home)?
    —–

    Guys, Real Estater knows investment/rental property is different from second home. Is there any doubt that he is a Boxter Tax expert? I guess not.

  275. madhaus Says:

    #274, that is not true! #261 claims he bought a house in Palo Alto, then he claims he bought two rental houses end of 2010. So which one is the second home? Is it the first rental house he bought (which is thus the second house he owns) or is it the first rental house he bought that now has a tenant sending rent checks he wishes to wave around at Star Bucks?

    That’s why he is so confused. Would it help him if I let him know he doesn’t have a second home mortgage interest deduction just because he told a bunch of people on a blog that he bought something?

  276. RentalPropertyTaxExpert Says:

    The biggest problem with TurboTax is that if a monkey is answering the questions (like saying “yes” I own a second home when it’s actually rental property), then the results are pure garbage.
    ——

    But at least he is going to have “full control” on his wrong answers and consequences as a result of it. That’s called “being in better position to respond audit query”.

  277. SEA Says:

    My guess is that each additional home after the first is a second home…

  278. SEA Says:

    “Another more fundamental reason to do taxes yourself is to be in full control of over one’s own financial information. After doing taxes, I can see how each component of my incomes and deductions fits into the tax equation. The knowledge gained is essential as a part of one’s financial planning. If I am ever audited, I would be in a better position to respond.”

    That explains why criminals always represent themselves so well.

  279. RentalPropertyTaxExpert Says:

    That explains why criminals always represent themselves so well.
    —-

    That’s what Zacarias Moussaoui did. He wanted to be in “full control” and “better positions” to answer questions.

  280. SEA Says:

    “The next day, he was sentenced to life in prison without parole. As he was led out of the courtroom, Moussaoui clapped his hands and said, ‘America, you lost… I won.‘”

  281. SEA Says:

    And who cannot forget when Kevorkian represented himself?

    Yup, convicted of Second Degree Murder.

    He didn’t need Feiger:

    “Kevorkian was acquitted in that trial and all subsequent trials where Fieger represented him. (Kevorkian was convicted when he represented himself in his last assisted suicide trial in 1999).

  282. RentalPropertyTaxExpert Says:

    Would it help him if I let him know he doesn’t have a second home mortgage interest deduction just because he told a bunch of people on a blog that he bought something?
    ——

    What is “something” he bought? Dollhouse or doghouse?

    If it is dollhouse or doghouse, mortgage interest amount is deductible from tax liability (provided dolls or dog is/are paying rent). He can claim it to be zillionth home, but not as second home.

  283. madhaus Says:

    I think IRS audit agent will have a good long chuckle at would-be rental property kingpin who thinks once he borrows a million he’s out of breath taxwise.

    Hint: To be a property investor, you have to buy some investment property. Talking about it on a blog is not a tax event.

  284. SEA Says:

    “Talking about it on a blog is not a tax event.”

    It’s a good thing too. Imagine if we had to hear about the extra 25 cents in taxes due as we’re informed $500,000 is not a lot of money.

  285. madhaus Says:

    25 cents in taxes and six thousand in penalties. Don’t forget the penalties! Which are all Obama’s fault. Something about AMT.

  286. RentalPropertyTaxExpert Says:

    It’s all mad houswife’s fault. It started from her comment #114. As reply in #118, the only thing Real Estater wanted is to prove a housewife wrong (and what’s wrong with that?). Then the whole tax issue started snowballing from there. Now the snowball is so big that you can make an igloo out of it and treat it as your “second home”. It’s all housewife’s fault.

  287. RentalPropertyTaxExpert Says:

    25 cents in taxes and six thousand in penalties.
    —-

    If paying penalty is cheaper than paying tax on time, everybody would pay penalty (rather than paying tax on time). If Real Estater knew that, he would not have to pay $1000 penalty.

    But hey, nobody understands Real Estater’s tax problem. He is “lonely at the top”. Even IRS did not understand his problem and penalized him as a result.

  288. SEA Says:

    “If Real Estater knew that, he would not have to pay $1000 penalty.”

    When you do your own taxes, you know it all.

  289. Real Estater Says:

    SEA,

    Read the link. If you understand it, you’ll see that it’s nothing more than a case of Pralay being a clown. There’s a reason God only gave him the task of managing his rent check.

  290. RentalPropertyTaxExpert Says:

    There’s a reason God only gave him the task of managing his rent check.
    —–

    God also promised me to give me a task for managing Real Estater’s “second home”.

  291. nomadic Says:

    c’mon 300…

    Hey, SEA, did you know that Jeffrey Feiger’s older brother was a famous one-hit wonder? (He died last year.)

  292. SEA Says:

    “If you understand it, you’ll see that it’s nothing more than a case of Pralay being a clown.”

    Did the tax code suddenly change?

  293. Tuno Says:

    I’m beginning to think that RE does not have the spare couple hundred bucks, to pay a CPA to look over his return. Or, as is more likely, that he owns no rental or second houses, and so does not want to spend money on info that he doesn’t actually need.

    RE, in a way you’re right – I know the general answer to the second question you posed. But I do not know it well enough to explain it on a blog. If I were going to act on the answer I could give, I would first research it and come up with a more precise answer. But I am not going to do that for you. For one thing, I’m not a licensed tax advisor. For another, you are lazy and if you are literate you can do it yourself. But the main reason is that you are not teachable.

    BTW, it is possible to have a very high income and not be affected by the AMT. it all depends on the deductions you take. Pralay’s lack of an AMT problem tells us nothing re his income.

  294. madhaus Says:

    #292, tax code is always changing. That’s why it’s best to ignore the experts and be in a better position to handle one’s own audit and subsequent incarceration.

  295. Tuno Says:

    RE: “All they’re doing is data entry into a Turbo Tax equivalent. There is nothing they can do that you cannot do, and there are things you can do that they cannot do.”

    SEA: All a tax attorney does is data entry? There is nothing a tax attorney can do that you cannot do?

    that is an amazing assertion, isn’t it, SEA. I suppose there is nothing a surgeon with a scalpel can do that a chimp with a machete can’t do. And a chimp with a machete can certainly do things that a surgeon with a scalpel cannot.

  296. DreamT Says:

    lol :) thanks for all your posts, Tuno. Hopefully you don’t ever feel too sane to keep posting.

  297. nomadic Says:

    Tuno gets fed up:
    For one thing, I’m not a licensed tax advisor. For another, you are lazy and if you are literate you can do it yourself. But the main reason is that you are not teachable.

    Love it. After all of those kind, patient posts she gets to the heart of the matter. :-P

  298. Real Estater Says:

    First nomadic got on his high chair, and then showed a post that does not address the question under discussion. Then Tuno came out to point out RE’s shortcomings, and once again couldn’t answer the very question she is criticizing RE on.

    At a very minimum I have a solution with Turbo Tax. Looks like these two better go make an appointment with HR Block.

  299. Real Estater Says:

    Moral of the story: Next time you guys feel like criticizing someone, better make sure you have some basic competency in the subject area. “Go talk to a tax God” is not sufficient demonstration of your competency.

  300. SEA Says:

    Tuno- Yes, and there’s nothing a plumber does that Drano cannot fix.

  301. SEA Says:

    “make sure you have some basic competency in the subject area.”

    So I’d better consult a plumber to see what Drano can fix?

  302. Real Estater Says:

    SEA,

    You need to consult a couple of people.

    First, consult immigration to see if your legal status is still valid.

    Second, consult a psychologist to see if there’s any mental retardation.

    Third, get a second woman’s opinion on plumbing.

  303. SEA Says:

    Before I consult those people, could you demonstrate ‘some basic competency’ related to your suggestions?

  304. nomadic Says:

    Is a high chair the Chinese version of a high horse? Or am I mixing metaphors?

    Anyway, don’t worry about us naysayers, RE. You do your taxes however you want. It won’t bother us a bit. Good luck.

    Geez, some people just won’t accept help! I wonder why.

  305. Real Estater Says:

    >>Is a high chair the Chinese version of a high horse? Or am I mixing metaphors?

    Alex might be able to help, but I suggest you go consult with a China expert.

    >>Geez, some people just won’t accept help!

    Correction: Some people just won’t accept no help.

  306. RentalPropertyTaxExpert Says:

    But the main reason is that you are not teachable.
    —–

    That’s not the reason he comes to Burbed. He comes here to help those who need most and make people learn.

  307. RentalPropertyTaxExpert Says:

    Geez, some people just won’t accept help! I wonder why.
    —-

    Pretty simple. As hint given in #283: To be a property investor, you have to buy some investment property. Talking about it on a blog is not a tax event.

    If this is not a tax event, he does not need tax help.

  308. Real Estater Says:

    From what I can see, Pralay is every landlord’s dream: Someone who adamantly believes in paying the rent every month, and isn’t even looking.

  309. nomadic Says:

    Damn, wrong link in 291. Not that it matters.
    http://www.youtube.com/watch?v=kVdnqEyToqg

  310. RentalPropertyTaxExpert Says:

    Pralay is every landlord’s dream: Someone who adamantly believes in paying the rent every month
    —–

    :) If that is the case I am glad. I would like to be landlord’s “dream renter” for paying rent every months. Same way, I would like my landlord to be “dream landlord” who is going to fix promptly whenever dishwasher breaks and garage door opener does not work.

    On the other hand, I cannot imagine of being a tenant of a landlord who has so much hatred towards “rentards” (aka drug-addict), just because renters are not buying homes and is not participating to increase his home equity.

    But hey, Real Estater is not a landlord anyway, irrespective of what he claims in a blog.

  311. Real Estater Says:

    Wow, long post from Pralay. Looks like I touched upon a sore spot.

    Of course he can’t be convinced RE is a landlord, since he is afraid of coming to the coffee shop. He won’t be convinced even after licking the check, because he has already decided he can’t be convinced.

    You see, this is why he is the dream tenant. He can’t be talked out of renting.

  312. RentalPropertyTaxExpert Says:

    Of course he can’t be convinced RE is a landlord, since he is afraid of coming to the coffee shop.
    —–

    So, that was not my “incentive”, but an “incentive” for you. :)
    Thanks for confirming.

    Looks like you are in pretty bad company here. Nobody believes you as landlord. :(

  313. Dream Renter Says:

    >>Nobody believes you as landlord.

    What is this, elementary school?

  314. madhaus Says:

    It is for you, #313. Everyone else has grown up. You are still kicking over block towers and demanding everyone notice you. LOOK AT ME! I HAVE A HOUSE IN PALO ALTO! REALLY!

    By the way, everybody, Roger does not own a house in Tracy. Nobody named Real Estater or Trophy Wife bought anything in San Joaquin County in 2010.

  315. nomadic Says:

    You mean he would lie about a house in -gasp- Tracy? Tracy of all places? He must be stepping up the troll game.

  316. SEA Says:

    May 05, 2006 Sold (Public Records) $581,000
    Oct 12, 2011 Sold (Public Records) $170,000

    I guess it didn’t work out so well, especially considering the foreclosure:
    “Jun 23, 2011 Sold (Public Records) $212,000
    This home was foreclosed.”

    The music stopped; the party ended.

    Hopefully the current owner won’t lose another $400k over the next five years.


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