Real Estate and LLC Questions. Need Help desperately.
Hi - I desperately need help with my situation. I don't have CPA and no CPA is available to file my taxes this week on time.
I did quite a bit in 2012 but I am sure my tax situation is probably common to many investment folks out there. But this is my first time, so I need help and filing date is near.
• Both, Wife and I, work. Two kids under age of 10. We live at primary home. We file jointly every year.
• I bought 3 single family investment houses in 2012 in foreclosure auction with hard money loan - one on my name and two on LLC. Tried to sell those properties. I couldn't sell and therefore I put them on rent in 2012.
• Refinanced one investment house (the one on my name) in 2012 and refinanced other two (LLC) in 2013.
• Do I have to file two 2012 returns? LLC Return as well as Personal Return? I am the only member on LLC.
• If I can't file before April 15, 2012 but if I don't owe to Fed or State, are there any penalties from Fed or Sate filings?
• How does IRS keep track of cost basis of the properties that I bought in 2012? Is it based on cost basis that I report in 2012 taxes or is it based on cost basis that I report the year I sell the property. I want to make sure that I do it right and keep the proof of cost basis for 3 houses I bought in 2012. My cost basis is tricky because of all the extraneous home improvement costs, hard money loan fees, traditional loan refinance costs, utility costs, etc. that I had to put in to get the house in ready state prior to renting each property out.
○ How to differentiate Rehab/Home improvement costs vs. Rental costs? I spent lot of money in purchasing and fixing up the rental properties prior to putting them on rent.
○ Home Improvement/Rehab Expenses:
§ Cost Basis of investment properties
□ What expenses can I use to come up with cost basis for purchase of three investment houses (that are rental properties after home improvement/rehab) so that I can use that adjusted costs basis when I sell the rental property? Foreclosure auction Buy price + Realtor commission + Hard Loan Money Points + Interest Payments to Hard loan money lender + Mortgage Refinance costs + Rehab/Home Improvement costs + Landlord Insurance costs + Staging Costs + Utility costs? How to best document cost basis and report in 2012?
□ Can furniture staging costs be included in Rehab/Home improvement/Cost basis costs? My original intent was to turn around and sell properties immediately.
□ One house that I bought in 2012 is on my name (as opposed to LLC). Other two houses that I bought in 2012 are on LLC name. What difference it would make to my filing of taxes?
□ Does adjusted Cost basis of a investment property have time limit such as expenses up to the time when the property goes on rent?
® Refinance of two investment houses (from hard money loan lender to traditional lender) happened in 2013 but these houses were purchased in 2012. However, Appraisal fees for these two houses was paid in 2012 for these two properties. How does this impact 2012 taxes and cost basis?
® Impact of Refinance costs on cost basis - Do I have to deduct pre-paids?
® I don't have receipts for all items bought from merchandise shops and some people who did rehab work didn't give me receipts.
◊ Can I use Credit card as a means to show proof of expenses where applicable to reduce paper clutter?
◊ Can I use bank "cash withdrawals" statements as receipts for expenses?
○ Where do general LLC expenses such as meals, online subscriptions for business, etc. go?
○ Vehicle: Vehicle/mileage Deductions? Is this per property or per business?
○ Rental Maintenance Expense:
§ Can I pay myself for expenses such as Property Management , "Roof and gutter cleaning" , etc?
§ How do I report this?
○ 1099 MISC - There are few contractors I paid over $600 for home improvement of investment properties.
§ Am I required to issue 1099 MISC? There is a contractor who didn't give me W2 because he already filed his taxes and doesn't want to redo his taxes.
○ I took BIG loan on credit card to pay for down payment. How can I use that towards deductions/tax break?
○ Home Office:
§ If I use home as office and claim home office expenses, do I have to adjust my cost basis when I sell my primary home? Is this advisable?
○ Can I add my parents (who live in foreign country) as "Dependent"
○ Are there any tax implications of property overseas and can the losses be carried in?