You’re the first real estate person I’ve ever heard admit that.

Pamela,
Laurel, MD

I appeciate your integrity.

I am a realtor who has tried to explain some of these same points. The fact that your hot helps! would definitly shave next time.

KL

I went the rental route because in your video you talked about losing your tax benefits if you ended up renting your (former) primary residence for 3 more years.

I do have a new blog, but I haven’t addressed this topic yet. I will eventually. You can check it out at http://www.kcmortgageplanning.com/blog

However, I was talking about the tax benefits of home ownership with the home you live in. You area talking about different tax benefits for ownership of a rental. Those are two separate things.

If you have a blog that details how this works, I’d love to link to it.

Thanks

Frank

I found your blog through the link in a Realty Times article. I have enjoyed what I have read and listened to so far, but I do have a bone of contention on your tax evaluation of owning real estate.

In your video you said you lose your tax advantages if you have a rental for more than 3 years after you had owner occupied it in the previous two years. You do lose the capital gains tax exclusion in that case. (The 2 in 5 rule excluding $250,000 to $500,000 in gains)

There are other tax advantages of owning rental real estate including depreciation. Where if you have a loss on that rental after you figure your rental income and subtact, insurance, maintenance, taxes, interest, depreciation, etc. and you have an adjusted gross income less than $100,000 (it phases out from $100k to $150k) you can use those losses to offset earned income (income from your job). If you make more than $150k the largely paper losses can be taken as losses against passive gains.

AND, with a 1031 exchange if you sell that property after the 2 in 5 rule is no longer in play you can still defer taxes forever with the proper strategy thus avoiding paying taxes. You can access some of if not all of that gain tax free through refinances. That does create an interest cost as well as closing costs, but you can take out that money tax free. (Always remember, I am not a tax advisor always consult with a tax advisor).

So your information is mostly correct, but you leave off what could be some very attractive tax favored strategies to continue to own rental real estate.

I know that it gets somewhat complex, but if you want to be a full disclosure type real estate agent shouldn’t you give full disclosure?

:)
Charlotte

Thanks Frank!

http://tinyurl.com/j842a

This graph has recieved alot of play in the uber, super-bearish realestate “don’t buy now” camps saying that -based on the graph – we are in for a massive correction. Do you have any thoughts on this graph? How would someone in the market looking to buy today want to offer any more than a house sold for in say 1999?