Fast Forward - Atlanta GA - Property Market today

.... and if you have a spare $10,000,000 USD

50 Valley Rd NW, Atlanta, GA 30305 | MLS #6635706 | Zillow

 

Fascinating. Clearly, I'm intrigued by there. For now paying down debit and reading a lot here and trying to get to know you all so I do better next time property wise ;-)

 

For the capital gains, could you not own the properties through a Wyoming LLC so the gain accrues to the LLC and thus nothing to your personal name unless and until the LLC pays a dividend to you?

 

This is a complex question and I will start by saying I am not a CPA so do not rely on this information as advice and I would suggest anyone seek tax advice both from Australian and US CPA's. Remember that the answer from a US CPA will not consider the Australian impact so you need to consider both.

The way I understand it a Wyoming LLC in itself will not affect the tax liability. Normally people set up Wyoming LLC's as a form of asset protection as the state of Wyoming offers great asset protection for owners.
What does affect the tax situation is the election of the LLC to act as a pass through entity or act as a corporation. This will determine how you are taxed.
From your reference to "dividends" I suspect you you are referring to an LLC that acts as a corporation. As LLC's acting as corporations pay corporate tax and then dividends when they distribute to the owners.

LLC's that act as a corporation pay the corporations tax to the IRS (21% I believe which was greatly reduced by Trump in recent legislation) and then a distribution tax (I believe its 15% last time I checked when funds are distributed to the owner of the LLC, unless that changed under Trump I am not sure)

The problem I see with acting as a corporation and not as a pass through entity is that there is double taxation for an Australian tax payer as the ATO will not give you a tax credit for the 21% already paid. You may not need to pay any tax in Australia until the funds are distributed however when they are you would only get a tax credit in Australia for the 15% dividend payment only. (In this example you have already paid 36% to the IRS but in the eyes of the ATO you have only paid 15% and they will want to tax you the difference between the 15% and your marginal tax rate)

An LLC acting as a pass through gets a 100% tax offset for taxes paid to the IRS.
That's my understanding but check with your tax professional as I am no expert on corporations tax.

Perhaps some clever accounting and planning can make this structure work for you. I don't think a public forum is the place to seek the answer to this complex question and I suggest anyone considering this seek professional tax advice.

 

I don't think a public forum is the place to seek the answer to this complex question and I suggest anyone considering this seek professional tax advice.[/QUOTE]
Agreed. But as an education and awareness post, this is incredible. And allows people to then go off and ask an accountant from a more self-informed basis or self eliminate. I'm so impressed by the knowledge and generosity of sharing here. Thank you. Not buying in USA but still an interesting educative post.

 

Agreed. But as an education and awareness post, this is incredible. And allows people to then go off and ask an accountant from a more self-informed basis or self eliminate. I'm so impressed by the knowledge and generosity of sharing here. Thank you. Not buying in USA but still an interesting educative post.[/QUOTE]


True

US tax laws are so very complex, you need a very good US tax accountant who will liaise with Oz accountant

owner of my properties in US is my Australian Trust

Definitely need professional advice, get this wrong and it will cost dearly

 

The bidding war markets in US

5 Markets Where Homebuyers Face Fierce Bidding Wars

 

Fast forward…… $35,000 homes now hitting close to $300,000 USD and no stock. Covid has just driven prices higher

I am out of this market at $350,000
USD.

 

You killed it.

 

Well done @MTR !! Atlanta has been booming on its own merits for a decade. And now the mega-boom that all of the US is experiencing (same as most of Australia, at present, too) is seeing for Atlanta values growing even more, as you highlight.

My holdings in Atlanta have gone bananas this past 12 months. Wish I hadda bought a few more; 3 years ago when they were much cheaper.

Meanwhile... I continue to expand my position in Alabama. It too, is booming. Perhaps more exciting though is that not only are values booming, but rental yields are ALSO increasingly massive! 3/1/1 single family homes that would have rented for USD $700-$750 per month, are now renting for $850, $900, and even $950 on occasion (if theres large square footage and a good rehab has been completed).

 

What a crazy ride

 

knocking myself for not jumping on the Atlanta bandwagon back when you started documenting your journey!

that said , can’t complain too much, Sydney hasn’t been as cashflow friendly, but the growth is still an okay 2nd place haha..

will never forget the 0.90 usd rates, and how I was tossing up between a holiday or a house in the states at the time. Went with the long holiday, and absolutely got experiences that are priceless, so will not compare, but the alternative wouldn’t have been so bad!

 

Thank u

AUD now around 75

If only I had a crystal ball would have purchased more

Your right about Syd….. you cant complain

 

The cash flow is why im in the USA. That I got unexpected capital growth, was a welcome surprise. Having said that; we are talking purchase prices of $100K in the US versus purchase prices of $500K+ in AU. So, since I got into the US a LOT later than @MTR (meaning Ive only seen for 20%-40% caputal growth in the last 3 years which is lovely but not a dent on MTR's 200%-500% capital growth rates based on some of her purchase/sell prices Ive seen); and as exciting as the capital growth "percentages" are of 20-40% for me; remember, this is coming off a low base of $100k-ish purchase prices.

I mean, 30% growth on $100k ($30k growth) is lovely for me, but a 10% growth on a $500k purchase price is actually a higher dollar amount ($50k).

But as I get older i simply care more about yield/cash flow. I love the security stability and assurity of monthly rental income flowing in. I love owning them cash-outright-no-mortgage and knowing that I get to keep much MORE of that monthly cashflow paycheck compared to a heavily-mortgaged AU property. I love the security of knowing that; whilst yes; many holding costs can change and vacancy may occur and the city/market supply/demand may change; at least ONE variable I have controlled/removed; being: not needing to stress about my mortgage interest rate chopping and changing over 30 years and thus eating into my monthly cashflow profit as a result of interest rate hikes (because I do not have mortgages on them at all). So many buy-and-hold investors take such a short term view (sub 5 years) on holding property into their future!

The fact that this country (AU) does not allow me to take out 30 year mortgages where I can fix the rate for the whole damn 30 years has; frankly; spooked me from the entire AU market full stop. Investors take out 400k, 500k (and higher) mortgages here on single properties, and can only fix the rate for 5 years max. They say "in year #6 I will just shop around and refinance" but even then.. the ENTIRE mortgage market could go up in rates and in year 6 just as you were chipping away on the debt and seeing the light on the horizon of positive cash flow, BAM! Your interest rate was jacked up and you go back into negative. Even a 0.50% jack-up on a 500k mortgage is a cash flow killer. No thanks.

No joke - I believe in Aus and the capital growth opportunities are great (cycle-dependent...) but I can tell you, if lenders would have written me 30yr-fixed mortgages here, I would have kept going here instead of pivoted to the USA.

Right now the solid cash flow every month in the USA on my cash-flow-cows is being used to expotentially pay down the remaining debts on my AU capital-growth-kings. It is a wonderful balance and a wonderful thing. A symbiosis if you will, but not one found in nature, rather, in investment: surplus capital growth is extracted from AU; used to buy cash-flow'ers in the US; wherein the surplus cash flow is brought back to Aus to expotentially pay down debt on AU capital-growth'ers

 

And almost as though its right on cue... I know this is cruddy Murdoch press but... this article published today quotes some alarming numbers about the mid term mortgage rate predictions for Aussie mortgage holders. This is why a cash-outright USA strategy helps me to sleep at night:

Terrifying prediction for mortgage holders

 

Hi guys, i'm a new member to the forum, based in Brissy. Like a few of you guys I have some property in Atlanta, going back to my first purchase in 2012. I've had some seriously hairy moments with my properties over the years, learning a hell of a lot in the process.

I'd be interested if anyone can recommend a good accountant in Atlanta. I've been using the same firm for the last 9 years or so, but their performance / communication has been steadily falling off the last couple of years, to the point that I now need to make a change. I'm going to let them finalise my US returns for 2020, but for next years returns i'll be looking for someone new. Goes without saying, but i'll need someone who's comfortable with LLC's and overseas property investors.

I've been tracking chat relating to the Brissy market on this site, but today only thought of popping in 'Atlanta' in the search box, and was pleasantly surprised to see this thread. Looking forward to seeing if anyone has any advice..!

Thanks

 

Zephrina, excellent acct, lots of foreign investors

also look at biggerpockets usa forum

Liburn, GA Tax Preparation & Accounting | ZMC & Associates LLC

 

MTR, thanks for that. Yes, i also had a browse on bigger pockets and picked up a couple of recommendations from over the years, but I will certainly drop ZMC a message and fingers crossed they can help me out. It's not an urgent issue, more-so planning ahead for next years returns.

I also had a browse through some of your earlier posts re: Atlanta, and i'd like to say well done and congrats that it's all going so well. I think we may have had similar experiences in the early years, i had my first tenant just leave without paying rent & no notice, break-ins, all the copper pipe stripped out of a property, outside ac condenser stolen, so i put a locked cage around the replacement, they then took both the replacement unit & cage..! My favourite was a homicide next door just as I was re-letting a property, safe to say I struggled to re-let that one. All-in-all though, it's been fun and you learn a few lessons along the way.

 

Omg, nothing as interesting as your experience

I bet you purchased in the belt line. It was probably worst area to buy in 2011?? But now brilliant

I have one in belt line but most my properties are in south of Atlanta

 

Yes, the one with all the problems was in Peoplestown, my BA warned me but I took a punt, but had so many sleepless nights i eventually decided to sell. I should have stuck it out as i paid $85k, sold for $75k (2016) and its now worth $350k..! I couldn't take the stress though..!

I had 4, but still have 3, with 2 in West End and 1 up around Bolton / Riverside.