by on November 17, 2011 2 Comments

Are Your Real Estate Losses Limited By the At Risk Rules?

In the 1980s it was common place to see limited partnerships used in real estate investing. These partnerships often offered attractive ways for investors to reap tax losses that exceeded their initial investments. Some, if not many, investors utilized these limited partnerships as vehicles for tax savings rather than as real investments at least that was how the IRS saw it.

Passive Activity Loss rules and At Risk limits were created to dissuade investors from using these limited partnerships. The feeling was they lacked economic substance — in other words they were not created to make a profit.

I think most investors are aware of what the Passive Activity Loss rules are, but these days many seem unaware of how the At Risk limit can impact any real estate losses in a given year.

Passive Activity Loss rules refresher: [Read more...]

Filed Under: Depreciation, IRS, Purposeful Planning
by on November 14, 2011 2 Comments

Attention Aging Baby Boomers: Abundant Retirement Income Still On Your Menu

About once weekly, sometimes more, I have a conversation with a fellow Boomer who’s had a rough day. It started the night before when their mind wouldn’t stop dialin’ 911. A realization had slammed into their psyche with the force of a car from the blind side. Their retirement plan simply wasn’t producing results. Here are the common denominators of these calls. [Read more...]

Filed Under: Purposeful Planning, Real Estate Investing, Retirement Income, San Diego Property Owners
by on October 31, 2011 Leave a Comment

Tax Considerations In Your Purposeful Plan

There are two basic approaches to real estate investing. Investing for current income or investing for future income. Both approaches are useful depending on where you want to go and where you are in your plan. This is where you might hear the BawldGuy talking about Purposeful Planning.

There are a number of ways real estate can create current income. The best examples would be through wholesaling and flipping. In this post, I want to look at rental property which can be selected to emphasize income or capital growth.

Rental property has four ways to create wealth or income.

• Cash flow
• Appreciation
• Equity buildup
• Tax savings

An investor can attempt to maximize one or more of these aspects of real estate. For those wanting to create the most current income would emphasize cash flow. An investor looking for capital growth might emphasize appreciation and/or equity buildup when selecting a property.
Regardless of your investment strategy, tax planning is an important consideration that needs to be planned for as well. Your Purposeful Plan should take advantage of tax strategies that minimize taxes during the investment period. [Read more...]

Filed Under: IRS, Purposeful Planning
by on October 18, 2011 6 Comments

The Paradox — Why San Diego and California In General Are Terrible Long Term Plays, But Sometimes Golden In the Short Run

So many of you who come here regularly know my professional opinion when it comes to investing in San Diego real estate long term — DON’T. Same goes for the rest of California and the west coast for that matter. Stayin’ away is your best approach.

Why?

The answer is simple, but multi-faceted. I’ll be brief. (Hey! I heard that snicker in the back.)

1. The vast majority of property out west is relatively older. In San Diego, anything built in the 80′s is called newer. :) If it makes sense to keep a property for the duration numbers wise, but it’s 40-100 at your retirement, your cash flow will suffer noticeably. [Read more...]

Filed Under: Capital Growth, Purposeful Planning, Retirement Income, San Diego Property Owners
by on September 29, 2011 Leave a Comment

Real Estate Investing For Retirement – A Short Review

Every year I’m blessed to have dozens and dozens of conversations (I call most of ‘em fixes.) with folks either wanting to get started on a real estate investment plan, or current investors who’d like to get back on track from a minor derailment. Both share a keen desire to achieve a magnificently abundant retirement. Sometimes I can help, sometimes not. I do my best to at least show them the direction in which to go.

Here are some things to ponder — food for thought if you will.

• Know where you are now. Rudimentary? You bet. But try gettin’ to any ‘Point B’ without knowin’ your ‘Point A’ and see how it works out. :)

• Understand how crucial it is to comprehend the difference between capital growth and cash flow — when to use one or the other — and when to shift gears from one to the other. [Read more...]

Filed Under: Purposeful Planning, Real Estate Investing
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