Morris Invest: Rental Property Tax Deductions

100 thoughts on “Morris Invest: Rental Property Tax Deductions

  1. Very concise unlike a lot of other videos on the rental properties. Good job

  2. I was just listening to the Rich Dad Poor Dad podcast on depreciation and searched on youtube for more elaboration and it was Morris invest who they were speaking too…. so wow small world. Thanks for the valuable video!

  3. Does this still apply after trumps tax escapade? I own one rental property as of now. trying to buy another primary home, currently renting. IM considering starting an LLC next week in SC, rental property is in VA BEACH.

  4. Would you recommend purchasing Turbo Tax audit protection, it's $60 and claims to represent you if you get audited? I have 3 rentals valued at 600k total and have losses on all the properties, lowering my taxable income substantially.

  5. Do you have an opinion on mobile home rental investments and stick built homes?
    I just recently started with my own rentals but my dad has a large mobile home park with 100 lots and 42 homes are his And the ROI is really really good.

    The reason I ask is because I know that mobile home value drops very quickly but at this point it doesn't concern me because the ROI is so high and I have worked with my dad on buying and selling mobile homes and my repair costs are extremely low.

    But I am looking into investing on more rental homes And would like to know your opinion.

    After Deducting for 40% From my gross income for taxes repairs and God knows what, My ROI is 49% on one home and 48.5% on the other.
    And both homes are debt free at this point. I paid $8,000 on one and $9,000 on the other and one brings in $600 and the other is $550 per month.

    But when it comes to re-investing the only downside I have run into is that the mobile homes can only offer me a laughable amount of collateral.

    If it were stick built I could use the homes as collateral to keep re investing and having higher value assets in the long run. But the ROI on stick built homes is very low compared to Mobile homes.

    Would you keep buying cheaper mobile homes with high ROI's or would you mix stick built homes into that portfolio to have appreciating assets like stick built homes?

  6. Incorrect information! For example: a new roof is NOT a repair and therefore NOT deductible. .
    A new roof is an improvement (Morris even used the word "improve" when referring to the roof. (around the 4 minute mark) Long distance travel to visit your properties, you canNOT deduct meals 100%. Meals are only 50% deductible. Travel in your car to your rental properties: you can NOT claim both mileage and gas expenses.

  7. The mileage credit is ridiculous! For example, I know people who use a service to accept rent and of course there's a fee. I have 3 local properties so I can drive, pick up the rent, and stop in the place I was undoubtedly going to drive to anyway for lunch because it's on the way. Now instead of paying a service 2% or 3% I get all of the money, an opportunity to visually inspect the property (last time on one I realized I need to clean the gutters), and the drive itself becomes a profitable trip at tax time.

  8. Slightly off topic but can you do a video on buying real estate with high property tax rates or do you just avoid them altogether?

  9. So if you can write off insurance and property management expenses does that mean you don’t have to factor those into your roi at all?

  10. Extremely valuable information. Would you care to share a preferred accountant? His or her location doesn’t matter if they are worth it and knows the business they can have my business. Thank you again for all of the informative videos!

  11. i live in kansas city and there are some nice looking duplees for 110-140k that look very nice in a suburban area, i dont have much money to put down but i could do a first time home buyer right? I have good credit etc, how much do you think I should save up before buying/looking for one? Live in one rent out one

  12. Do these deductibles work if you're not active with your rental property? Can I apply these if I'm passive such as just hiring property management to do all the work?

  13. Question: Does one has to have a business/LLC in order to claim these deductions?

  14. When purchasing through Morris Invest, can the initial rehab costs be counted as a deduction for the investor?

  15. LEGEND! Great Video! Do i need an LLC in order to offset my 9-5 Job taxes?

  16. I wasn't expecting this much of tax deductions . Now I wonder , if India is opting this much of benefits for its investors.

  17. You did not cover one more point . If I earn money from rental on my condo after my expenses insurance and everything else comes out can I take every penny of what’s left And pay straight towards the mortgage to paying the rental condo off. And just write on my taxes for the end of the year that I didn’t have anything to pay taxes with because everything I had left went to expenses and paying the mortgage on my condo ????

  18. Jesus against money and taxes. He called Mathew a tax collector from his job. Jesus wants us to use ask and receive world wide. Lucifer invented money.

  19. Are these write-offs only possible if you have your properties under a legal business entity, or can you make these write-offs as an individual as well?

  20. Hey Clayton , Are any of these deductions contingent on being Passive or Active?

  21. So I just bought my second home , but had to make it my primary resistant due to my finances. And will live in the property of course for at least the first year.
    However I have two renters lined up, to off set the mortgage.

    Should I still create a LLC and treat the property part that I rent as a rental property,
    or lets say can I ?

    Awesome videos btw

  22. I can't get over people disliking videos like this. Its useful to you great, if not go watch something else… but 43 people felt the need to dislike this video. Very lame!

  23. Just started renting. Your video is extremely helpful. Concise and to the point. I like that. Keep it up, you're doing a great job!

  24. Repairs are deductible only if the house is rented with tenants living there.

  25. Hey, Clayton. I enjoy your videos. I don't think you can deduct interest on home equity line of credit.

  26. Replacing a roof is not an expense, it is an improvement that extends the life of the property and a s such must be depreciated of 27.5 years and not expensed in one year. A small portion of the roof can be repaired and be claimed as an expense. Ithe IRS ruling is that if any work restores the property or extends the usefull life of the building, it must be depreciated not expensed. Meals can only be expensed up to 50%

  27. Casual losses far into a somewhat nebulous category. The IRS allows a casualty loss to go to the lowering of the cost basis of the property rather than a straight deduction so that when you see the property there is less of a taxable gain. Some casualty losses are allowable but this is a nuanced area. Claiming a home office is also nuanced in that it reduces the amount of property taxes on your own home that you can deduct.

  28. Can I as an investor of a rental property write off expenses for initial rehab of a house and the contractor’s work on the house? Your videos have been extremely inspiring and informative. Hope to get out of the rat race soon.

  29. Hello, does this apply if you are renting rooms in the house that you live in? Or is that different? Thank you!

  30. But if you don't pay tax now. You will need to pay later when you sell the house. When you sell the house we are required to pay back the deduction portion taken before…

    We pay either now or later on.

    Which way is better. If one is selling the house in 2 years?

    By paying later on we have more cash flow.

  31. If I have a property that Im barely clearing the mortgage and havent done much in repairs so far, should I file my taxes with the rental property, or just skip this, low key 🙂

  32. Here is an great example I found on Nolo:

    Viola bought a small apartment building and sold it six years later for $300,000. Her starting basis was $200,000. During the time she owned the property she took $43,000 in depreciation deductions and paid $13,000 for a new roof (an improvement). Her depreciation deductions reduced the property's basis, but the roof improvement increased it. Her basis at the time of the sale is $170,000. Viola calculates her taxable gain on the property by subtracting her adjusted basis from the sales price: $300,000 – $170,000 = $130,000.

    As you can see, when you sell your property, you effectively give back the depreciation deductions you took on it. Since they reduce your adjusted basis, they increase your taxable gain. Thus, Viola’s taxable gain was increased by the $43,000 in depreciation deductions she took. The amount of your gain attributable to the depreciation deductions you took in prior years is taxed at a single 25% rate. Viola, for example, would have to pay a 25% tax on the $43,000 in depreciation deductions she received. The remaining gain on the sale is taxed at capital gains rates (usually 15%, 20% for taxpayers in the top tax bracket).

    So basically there is no benefit to depreciate property. Uncle Sam will get you either now or later. If you leave all the property to your heir, they will be burden to heavy tax later on, that they might as well not take it.

    I do not see the benefit or anyway that you can just hold the property forever. Eventually everyone will die, all asset will need be transfer to someone else. That someone will be burden to all the tax, unless the successor just donate all to charity like my uncle did.

  33. Your accountant is correct… Below is an great example I found:

    The basis of property you inherit is usually the property’s fair market value at the time the owner died. Thus, if you hold on to your rental property until death, your heirs will be able to resell it and pay little or no tax—the ultimate tax loophole.

    Example: Victoria inherits her deceased parents' home. The property’s fair market value (excluding the land) is $300,000 at the time of her uncle’s death. This is Victoria’s basis. She sells the property for $310,000. Her total taxable profit on the sale is only $10,000 (her profit is the sales price minus the home's tax basis).

    The basis of a home or other property you receive as a gift is its adjusted basis in the hands of the gift giver when the gift was made.

  34. What if an investor has no one to pass their real estate property to? What would be the best course of action to benefit from the real estate asset saving?

  35. How much of the 40% from the freedom number really go back into your pocket?

  36. Can i depricate my rental property that hasnt been rented in the tax year? Its s dingle family house

  37. Clayton ..who do you recommend for landlord insurance? Mainly for bad tenant/vandalism

  38. Cheers for this, I been tryin to find out about "passive income investor" for a while now, and I think this has helped. Have you heard people talk about – Qonmily Passive Formality – (do a search on google ) ? Ive heard some super things about it and my co-worker got great results with it.

  39. In most cases a new roof on a property would likely have to be depreciated over time and could not be deducted all in one year.

  40. Disagree that replacing the roof is a ‘repair’. That is a capital expense. This could have changed since the video was made.

  41. What about if you live in the property, such as duplex? Can you place travel from work to the property?

  42. How about if you buy a condo and pay association fees….is that a write off?

  43. Great video. Thank you. Will you please forward the name of “a great real estate tax accountant”?

  44. I'm going to take a class on preparing taxes, and there are about 6 levels to achieve to be a professional tax consultant. This really is an eye-opener for me. Thank you ? so much?

  45. A write off is still money spent.

    Yes it lowers taxable income but it’s still money spent!

    I’m currently trying to decided on whether to do real estate investing with properties vs REITs.

    Any advice?

  46. Hey Clayton, for depreciation, do we simply divide purchase price by 27.5? Or is it current market value each year?

  47. Do these deductions also work if you live in one of the apartments in your rental property?

  48. Thanks for de-mystifying the idea of "no taxes on investment property. " Robert Kiyosaki makes it all sound like the world is brainwashed and miss educated.

  49. These are all write offs however they DO NOT effect your yearly property tax

  50. I know ??‍♀️??‍♀️??‍♀️I should be listening, but I'm mesmerized by your eyes??‍♀️??‍♀️??‍♀️

  51. Will these deductions raise a flag if the LLC is not under the real estate industry?

  52. Clayton; if i buy machinery like sander, tile cutter, etc and i only use them for my rental property I mean to fix stuff like furniture etc is that machinery tax deductible ?

  53. Hey question? If u don’t have a business can u write these things off on your personal income? Newbie here

  54. Deductions are fantastic if you're not anticipating qualifying for a loan. A bank's going to look at your adjusted income to determine your ability to qualify for a mortgage/ loan. If you show a loss to save money in taxes, but would also like to make a move in real estate, you're cutting your nose off despite your face, no? You either claim a loss and save money with the IRS or disregard your write offs to show a gain to qualify for loans. Either way you're doomed lol.

  55. land is appreciating, building is depreciating (just much slower than the depreciation rate of your taxes)

  56. Do you think the tax benefits are worth it on a paid off property?

    I hear so much that if you don't have debt in the property it's not worth investing in real estate

  57. Is HELOC interest rate still tax deductible? A CPA Illinois friend of mine said no. New law I'm guessing in 2018.

  58. Hello is good if i buy a car for my real state LLC, and if i sell other things with it like office products, then isn't a problem???

  59. Question: when you do a major repair (like roof, floors..etc) can you claim it as an expense or do you do scheduled depreciation..?

  60. Can you do a video on the difference between property manager and management company?? Thank you.

    Do you think with an experienced property manager you can forego a management company??

  61. How do you avoid taxes in a year with little to no repairs? Depreciation is only a couple thousand a year…

  62. I wish I could deduct a new roof as an expense in the current year but it needs to be listed as an improvement and depreciated over the expected life span of the improvement.

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