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Real Estate Holding

Submitted by grestep@cox.net on 17 August 2006 - 7:41am

I have several rental properties. Where do you put these? I put them under assets but then they receive 8% return, which isn't correct.

‹ regular assest earnings predicted using Monte Carlo
Submitted by Dick Munroe on 17 August 2006 - 9:00am.
1

Unfortunately we don't have specific support for rental properties. You have to use the Special Expenditures/Receipts for handling the rentals. Enter your income from the property as a taxable special receipt. Enter your interest, maintenance costs, and other deductions as deductable special expenditures. I'm not 100% sure how depreciation should be handled so I'll turn that question over to Larry. You'll have to calculate capital gains by hand when you anticipate a sale and enter that as a special receipt taxable at capital gains rates.

You're not the first who have rental properties and I've added a request for enhancement to the product to provide direct support for rental properties.

Best,

Dick Munroe

Submitted by grestep@cox.net on 17 August 2006 - 9:08am.
2

These are properties in Florida. I invested in them rather than the market because the real estate value is going up. The rental income is secondary. I need a strategy to include this in my assets at a different return rate than savings, etc.

Submitted by Laurence Kotlikoff on 19 August 2006 - 10:06am.
3

You need to enter not just the annual rental income as a special receipt, but also the projected final sales proceeds a special receipts in the year you intend to sell the properties. You'll want to do a little side calculation determining what the properties values will be when you sell them and enter the basis of the sale as a non-taxable special receipt and the capital gain as a special receipt that's taxable at capital gains rates.

Call if this isn't clear. My cell is 617 834-2148.

best, Larry

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