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Looking to purchase condo: Park City vs. Frisco. - Page 2

post #31 of 50
Quote:
Originally Posted by SHREDHEAD View Post
 

 

 

That's why I recommended renting long term.   Travel expenses are deductable if 50%+ of the trip is business.


Not quite correct.  Such expenses are deductible within a corporation or LLC against the gross earnings of the LLC, but the IRS requires strict accounting of time and proportional assignment of costs.  However, if you are simply renting a condo that you own, versus the LLC or corporation owning it, then unreimbursed business expenses are subject to a 2% exclusion, meaning you can only deduct expenses in excess of 2% of your gross family income.  That's a high bar.  Our condo LLC was audited by the IRS last year, and I can tell you it is no joke. Even though it was ultimately determined that we owed nothing extra, the accountant and legal costs of defending against the audit totaled several thousand dollars. You need to include those costs, as well as the time and hassle, in your calculations.

 

After a decade doing this, I'm tired of dealing with the whole thing, even as a local owner, and we're planning to sell the condo this summer just to reduce our bandwidth.

post #32 of 50

Do you know what was the reason your LLC got flagged?

post #33 of 50
Quote:
Originally Posted by raspritz View Post
 


Not quite correct.  Such expenses are deductible within a corporation or LLC against the gross earnings of the LLC, but the IRS requires strict accounting of time and proportional assignment of costs.  However, if you are simply renting a condo that you own, versus the LLC or corporation owning it, then unreimbursed business expenses are subject to a 2% exclusion, meaning you can only deduct expenses in excess of 2% of your gross family income.  That's a high bar.  Our condo LLC was audited by the IRS last year, and I can tell you it is no joke. Even though it was ultimately determined that we owed nothing extra, the accountant and legal costs of defending against the audit totaled several thousand dollars. You need to include those costs, as well as the time and hassle, in your calculations.

 

After a decade doing this, I'm tired of dealing with the whole thing, even as a local owner, and we're planning to sell the condo this summer just to reduce our bandwidth.

 

Ok, thread drift.

 

I own a rental property (leased, not seasonal, and no personal use) on the front range, about 5 hours away.  It is owned in my name, and gets reported as a rental on my Schedule E (not in an LLC, S-corp, etc.).

 

I do my taxes myself using H&R Block software, and try not to get cute. I work in mortgage and see lots of tax returns, and tons of guys claiming the maximum $25,000 loss on their rental every single year- I can't imagine how that isn't audit bait... "gee whiz, I sure suck at renting this property and lose tons of money each year, but lets just keep renting it for more than a 25k loss each and every year... seems legit."  For my own taxes, I usually have a small amount of net income that is eaten up by the depreciation expense, which jives with reality.

 

About twice a year I go and inspect it, and have claimed the milage on those trips (about 1000 miles total each year) as expenses against my schedule E income. I stay with relatives and don't claim additional stuff like hotel, food, etc.

 

Are you saying there could be a problem with that? The software even prompted me to do so as part of rental expenses, and I couldn't find anything from the IRS that indicated it was an issue.


Edited by anachronism - 4/10/15 at 10:13am
post #34 of 50
Quote:
Originally Posted by anachronism View Post

Ok, thread drift.

I own a rental property (leased, not seasonal, and no personal use) on the front range, about 5 hours away.  It is owned in my name, and gets reported as a rental on my Schedule E (not in an LLC, S-corp, etc.).

I do my taxes myself using H&R Block software, and try not to get cute. I work in mortgage and see lots of tax returns, and tons of guys claiming the maximum $25,000 loss on their rental every single year- I can't imagine how that isn't audit bait... "gee whiz, I sure suck at renting this property and lose tons of money each year, but lets just keep renting it for more than a 25k loss each and every year... seems legit.  For my own taxes, I usually have a small amount of net income that is eaten up by the depreciation expense, which jives with reality.

About twice a year I go and inspect it, and have claimed the milage on those trips (about 1000 miles total each year) as expenses against my schedule E income. I stay with relatives and don't claim additional stuff like hotel, food, etc.

Are you saying there could be a problem with that? The software even prompted me to do so as part of rental expenses, and I couldn't find anything from the IRS that indicated it was an issue.

It's no issue, generally speaking. There are some travel expenses associated with rentals that are not deductable, but generally they are.
post #35 of 50

There have been  2 times in my life I have semi seriously considered buying a ski condo.  FIrst was Park City back in the 70's when the place was growing like crazy. ( I would have had to get my father to put up the down payment and sign for the mortgage though and he was not a skier so it would have been a real hard sell.)  The second was Okemo's Solitude condos when they were first building them.  The offer was 20K down on 200K for a 2 bedroom condo.  Similar unit listed now for 540K.  I would have done OK with either property but are there still opportunities like that in this world?

post #36 of 50
Quote:
Originally Posted by crank View Post
 

There have been  2 times in my life I have semi seriously considered buying a ski condo.  FIrst was Park City back in the 70's when the place was growing like crazy. ( I would have had to get my father to put up the down payment and sign for the mortgage though and he was not a skier so it would have been a real hard sell.)  The second was Okemo's Solitude condos when they were first building them.  The offer was 20K down on 200K for a 2 bedroom condo.  Similar unit listed now for 540K.  I would have done OK with either property but are there still opportunities like that in this world?

 

I think so. As I mentioned, Winter Park seems to be one of those. I've seen very nice condos sell for very little. I remember in 2005 there were some brand new 2 bedroom units about 3 minutes away from the slopes that were selling for $150k.  In most ski town markets, property values dropped by very little, if at all in the recession, because in general the richer you were, the least you were affected- and most folks looking to buy a second home in a ski town are pretty well off (and probably aren't the type of guys in this thread talking about how many cosigners are needed on the mortgage to buy the ski-town condo...).

 

If you can afford to buy it, long-term a condo at a destination resort is probably going to be a pretty great investment. But that is different than needing to cash-flow and cover the mortgage, maintenance, and HOI with rentals. If you can't truly afford to pay the mortgage payment and expenses out of pocket, you can get bled white in a low snow year when you can't keep the place rented and everything breaks (and if you buy a place and rent it, this will happen).

 

It is kind of like Blackjack- you have some of the best odds to make money (which yes, are just shy of 50/50, it is not a perfect analogy), but you have to have pockets deep enough to not get bounced off the table when things swing in the dealer's direction.

 

I also think seasonal rentals can be very profitable, but if you are relying on those, you better have a very attractive property very close to a destination ski area, and you better hope a more attractive development doesn't pop up that eats away at what you rent for. Generally the places that can be expected to pay a year of mortgage payments through 3 months of renting are not budget-type places.

post #37 of 50
Quote:
Originally Posted by bounceswoosh View Post

Weekends, yes. The sleeper benefit is summers, too. I love being up here (Breck) in the summer. And those fall days when it's just on the edge of starting to snow. Antici......pation.

I'm sure Breck is awesome in the summer and fall. If I lived where you guys do, I'd certainly have a mountain property.
post #38 of 50
Quote:
Originally Posted by Coach13 View Post


I'm sure Breck is awesome in the summer and fall. If I lived where you guys do, I'd certainly have a mountain property.

I would also add that I waver back and forth between the rental approach and buying a property for my own needs and don't want to be too discouraging.  My parents owned a vacation home at a ski area in the mid-Atlantic when I was a teen and young adult and it was a great time.  There is nothing like having a home in the mountains and the ski lifestyle that goes with it as addressed by USASKIDAWG and others in this thread.  Just enter it with caution and modest financial aspirations.   Like USASKIDAWG my parents chose to never rent their place out because our family had so much fun using it on a frequent basis, winter and summer.

post #39 of 50
I bought a studio in Breck in 2003. I work full time in Denver. For several ski seasons, I rented it to a woman from Boulder from Monday through Friday and I used it on the weekends. It helped with my costs and allowed me to use it.

It has been the best thing I have ever bought. It is great to have all of your stuff there and having one person there as opposed to short term renters who really don't care about your condo has worked out great.

The summers are phenomenal. I bought it to use and have not regretted my purchase.
post #40 of 50
Back East we had a ski condo. For years we called it the money pit, a total nightmare of a homeowners' association amid real estate downturns and facility maintenance problems. However, my daughter would never have become the beautiful skier she is if we hadn't spent every weekend going up there (never rented it out). At some point, we had acquired three dogs as well. On Fridays, we all just piled in the van and headed up. Most food was already there, all the clothes we would need, etc. All Christmas's were spent there. We used it as a base for hiking in the summer. When we packed it up for the last time, prior to our move here, my daughter wept. She didn't care about our regular home.

The construction was flimsy, the weekend neighbors some years were obnoxious, the fees were horrid, but we somehow managed to break even when we sold. Money wise, we could have done better with savings bonds. But it was a huge part of family togetherness over the years. I'm glad we did it.
post #41 of 50
I do understand the draw of having a place in the mountains. I grew up not far from Wisp Resort in Western MD and my folks still live up there. Also-my brother-in-law has a house on the mountain at Massanutten Resort in VA and we've spent quite a bit of time skiing there over the years.
post #42 of 50
Quote:
Originally Posted by sibhusky View Post

Money wise, we could have done better with savings bonds. But it was a huge part of family togetherness over the years. I'm glad we did it.

 

Does your break even calculation include the money you would have otherwise spent had you rented a similar property for all those ski trips?  If not, I suspect you'd be way ahead.  This is something I factor in my decision in buying a property. 

post #43 of 50
No, because it's unlikely we would have skied anywhere as much as we did. In fact, with all that baggage, we might never have gone at all. Can you envision three Siberian huskies in a hotel room?
post #44 of 50
But even if you factor in just a few weekends per year, the calculation changes in your favour.
post #45 of 50
Probably equal to the money invested in savings bonds. As it was, we sold stock to do it. We barely broke even. But I'd do it again.
post #46 of 50

The cute little house we rented in Whitefish for 1650.00 per month will be on the market this summer for 295k.

 

As they say, do the math....

post #47 of 50
Quote:
Originally Posted by Fuller View Post

The cute little house we rented in Whitefish for 1650.00 per month will be on the market this summer for 295k.

As they say, do the math....

Uh-oh. Thought you had committed to return and rent it again?
post #48 of 50

She owns another house over on 3rd St W. It's actually a little bigger and for the same price so we will be there next year.

post #49 of 50
Quote:
Originally Posted by Fuller View Post

She owns another house over on 3rd St W. It's actually a little bigger and for the same price so we will be there next year.

You'll be able to walk to dinner!
post #50 of 50

In the late 90s, wife and I spent a month in Summit County, CO and considered purchasing a condo there.  Wanted to use it on winter and summer vacations and rent it out the rest of the time to help cover costs.  In looking at a few units and running the numbers, it just didn't make sense.  Upon returning back home to the east coast, we decided to look at Vermont.  Ended up buying a 2 bedroom unit at Killington (and still own it).  Bottom line the Killington units were half the price of an equivalent unit in Colorado and the net rental income was double.  No brainer.  We use the unit about 80 or so days a year (ski season, summer, and fall/foliage) and the short term rental income covers a good percentage of the costs (no mortgage - it's paid off).  When I go to Colorado each winter, the net rental income covers the cost of renting a condo in Summit County.  Buying in Vermont versus Colorado was definitely the right move for us.  

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