And as far as I know at the end of the year when I do tax return we can write off 25K as expanses for buildings and it doesn’t matter how many do I have.
Plenty of confusion here.
First, you can't write-off expenses for buildings.
You can depreciate buildings, and write-off that depreciation.
And, you can write-off the costs of maintaining and renting them.
So, if you buy a 3-family for $100,000 you'll get to depreciate about (1/27th) $3,600 of it.
Many people think you can write-off $25,000 of the house, but that's not true.
On top of that, you'll get to write-off the interest, assuming you borrowed for it.
Let's say that's about $6,000 for the year.
Add in repairs, taxes, insurance, etc.
So, now you're at (maybe) $15,000 in "write-offs".
But, you rented the place for $1,000 per month, or $12,000 for the year.
So, your net write-off is only $3,000.
Of course, you can get to $25,000 by overspending or under-renting.
But you might as well sell $10 bills for $5 if that's the case.
Some one told me that if I open a corporation, and buy real estate under that name I can write off more? Is that true?
Still more confusion.
While the Corporation might be able to write-off more, you'll write-off less.
I'm assuming you're talking a C-Corp, which more or less "stands on it's own".
Think of the situation I've outlined above...the $3,000 write-off, and let's assume you have other personal earnings of $50,000.
If you ran it thru a corporation, it (the corporation) would be able to write-off $3,000 against earnings of $0...
...so it would owe no tax.
You, as an individual, would NOT have access to that $3,000 loss, so you'd be taxed on the full $50,000.
If you ran the property thru an LLC, the $3,000 loss would pass to you, and you'd only be taxed on $47,000.
Also for instance if we ever decided to close or cant maintain them anymore and go bankrupt we will not be personally liable for the loses, Is that true ?
This is probably the biggest misunderstanding in business.
Most people assume that when they run stuff thru an LLC, Corp, or Limited Partnership, that they won't be personally liable.
In most cases, it just isn't true.
I have an LLC for my rentals.
When I got a Lowes Card, I had to personally guarantee payment.
When I got a mortgage, I had to personally guarantee payment.
When I got a Bank of America Card, I had to personally guarantee payment.
When I set up a Line-of-Credit, I had to personally guarantee payment.
An LLC or Corporation protects you (somewhat) from lawsuits.
But even then, you can be found "Personally Liable" if you did, or permitted, something dumb.
Dumb, like not shoveling snow -- or leaving a can of gas next to the furnace.
If anyone has any suggestions or know anything about it I really appreciate it. Because we are in the process now and trying to figure out the right way.
To start out, I'd read every thread in the Real Estate forums on this forum.
Then I'd read the Classic Posts forum over on www.richdad.com .
Real Estate really isn't that tough, but it sounds like you've been given some very poor advice so far.
If I were you, I'd make sure I understood the entire process clearly before sticking my money in.
You don't need to be an expert, but you can't go in without knowing the basics well.
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