Health Insurance for REI - Issues and Questions - Posted by Frank Chin

Depreciation is vastly overrated… - Posted by JHyre in TexOhio

Posted by JHyre in TexOhio on August 13, 2001 at 13:07:40:

Foregoing a 1031 to sell property at FMV & getting “steped-up” depreciation is a very bad idea 99% of the time…the only time I can think that it would make sense is if you have expiring losses or carryforward credits to offset gain upon sale of property. Otherwise, it’s a raw presnt value calculation…selling a property and paying taxes on gain now is not worth depreciation deductions attributable to the gain spread over 27+ years…ever.

Never let the tax tail wag the business dog…if I buy property and the depreciation shelters income from other sources (i.e.- rents< (operating deductions + interest + depreciation)), then I’ve bought poorly. The advice “Buy property so the depreciation shelters your income” MAY have made sense in the 80’s when depreciable lives on RE were much shorter…such advice makes NO sense in the 90’s. Rents are going up- congratulations- you are making more money after tax! Yes, you are paying more tax and are right to seek ways to shelter that income…buying additional depreciable property at high prices (relative to the income produced) so that other income is sheltered is a bad idea. Stick with your C-corp idea, among others.

John Hyre

Good point! - Posted by BillW.

Posted by BillW. on August 12, 2001 at 11:30:42:

JT,
Good point and good advice. Thanks for taking time to clarify this.
BillW.

Shopping for Health Ins… - Posted by JT - IN

Posted by JT - IN on August 13, 2001 at 09:25:55:

Frank:

Yes, shopping for health ins. is about as much fun as sticking your finger in a 220 outlet !!

It would be nice to have someone, an HR dept for small bus ppl, to evaluate these type of things. In a way, tht was some of what I did as a Financial Advisor, although insurance was a very small part of the equation. W/o proper rsik management, wealth planning is futile, as you will only be stock-piling your net worth, for someone to liberate you from your savings, at a later date, absent a good solid plan.

I greatly enjoyed the FP business. It was profitable, as far as salary/incomes go, and rewarding, but not comparable to what I am doing today. The main difference today is, I still do FP each and everyday, but my client base consists of 2; Mr. & Mrs. Brofft, (that’s me and my wife). The days of trying to please a client base of 150, or so, are gone. FP has been described as comparable to: “Wetting your pants in a dark blue suit; You get a warm feeling, but nobody notices”. You deal with lots of ppl, do a stellar job of meeting their every financial need, and they don’t really realize what a great thing that you have done for them, as lots of ppl really don’t understand what it is you are trying to do for them anyway. The financial accumen of the average bear, even the above average bear, ain’t that good; (neither is my grammer).

Well, to day, in RE investing, I am using a cumulative total of all the expertise that I have acquired over my business career, which has entailed, RE sales, Financial Planning and Cosntruction Mgmt. That is pretty much what I do evryday, and love every minute of it.

Good luck in the search for a new benefit plan. Should you care to bounce anythign off of me, when yuo begin your search, feel free to contact me.
jtbrofft@earthlink.net

JT - IN
800-939-1620