Posted by Jerry Freeman on November 08, 2002 at 10:08:16:
You might want to do an archive search on jhyre and/or hyre (also try “tax”) and see what comes up. He has developed a tax strategy for people doing mobile home deals. It will turn up in the achives. You can email him directly at johnhyre@ameritech.net. John is a tax attorney specializing in real estate, who also does mobile home deals himself. He has created a set of materials for people doing MH deals, that should be available soon.
Well I have been reading and studying now for 3 months regarding mobile home investing and I am just about ready to dive in. I have bought and read Lonnie’s book DOW and am actually in the process of reading it a second time through. I have a little money saved, and have also aquired a credit card so that I can do a cash advance to get started. I have actually found there is a mobile home park about 10 min from my house, so I plan to start there and find out who the park manager is and state to them my plan of action to buy MH’s and sell to young couples. Now the reason I haven’t gotten off my butt to actually start is I know nothing about doing the taxes and such for this. DO I need a lawyer come tax time to do this? Now being that there are so many of you doing these deals someone has to have some insight on this. I have searched the archives, but they seem to just be confusing me even more. Can someone explain the process to me in the simpiest form possible. I’m 23 years old and from NY state if that helps out. Please advise, as this is my only stopping point from me becoming financially free, because I am really fired up to do my first deal. Thanks again to everyone on CREONLINE and also Lonnie…
http://www.creonline.com/mobilehomes/wwwboard4/messages/11280.html This post is a continuation of the same discussion, brought up to date as of December, 2001. It contains important additional information about when expenses for “supplies” (included the home itself) are counted for tax purposes, plus discussion of how the cash method tax strategy is working for people who’ve actually used it.
John’s excellent advice to me. - Posted by Marc Donovan
Posted by Marc Donovan on November 08, 2002 at 18:50:28:
Until recently, as a dealer, you were REQUIRED to report using the accrual basis. This means that if you sell a home today for 10,000, 1000 down and 9,000 note, you had to pay taxes on the entire 10,000, minus expenses, right now. John Hyre relates a recent revenue ruling that allows businesses under 1 million gross to report on cash basis, even if they are a dealer. This means that you owe taxes now for the 1000 cash, plus the MARKET VALUE of the 9,000 note, minus expenses. And market value on most of these notes is around 50% for a brand new note (I buy these notes, so I can give you a real quote for tax valuation purposes). As the note ages, you must claim more and more as income each year, since the more seasoning, the more the market value.
Posted by Chuck-NY on November 07, 2002 at 17:10:29:
I would suggest you get started doing Lonnie Deals FIRST…you’ll have plenty of time to find a CPA that understands what you are doing. I would suggest a friends referral and not a large company like H&R Block.
I would look for someone who has a lot of tax experience. Maybe John Hyre might give you a clue as to what to look for.
Test yourself…if this really is your last excuse then tell yourself you are puting this on the back burner so you can get started NOW. If you find you suddenly have a new excuse, then I would say your real problem is fear.
Posted by Diane (TX) on November 07, 2002 at 17:56:52:
Ray is right. Do the deals, then worry about the tax aspects later. These deals are not that big, and they’re kind of cookie cutter, so you’re not going to screw yourself up by not getting professional advice before you do your deals.
Since you’re 23, you probably don’t have many friends who could recommend their CPA. I’d suggest checking out a real estate investment group in your area. See if there are any CPA’s people recommend. Don’t go to H&R Block. They’re fine for the usual case, but you won’t be the usual case.
By the way, you need a CPA in this case - not a lawyer. IMO, CPAs are generally much better with numbers than lawyers.