<p>I think you might be wrong about what you can count, notrichenough. Here are a list of just some of the things you can count. Probably the most important thing is to keep a detailed log of your activities, should you be audited. That would probably be the biggest reason why I wouldn’t do it. I wouldn’t like tracking and recording every single thing. Though maybe you can count the tracking and recording as time. It is probably not worth the aggravation. It seems you can even count reading of real estate books in your hours.</p>
<ul>
<li>Searching for possible rental properties</li>
<li>Attending real estate seminars or reading real estate books</li>
<li>Meeting with real estate agents and viewing properties</li>
<li>Meeting with mortgage brokers with regards to getting loans on properties</li>
<li>Travel time to and from the seminars and your property searches</li>
<li>Preparing your bookkeeping and tax information for your rental properties</li>
<li>Time spend buying or selling properties (i.e. signing the closing documents)</li>
<li>Studying and reviewing financial reports (Investor-type)</li>
<li>Preparing summaries or analyses for personal use (Investor-type)</li>
<li>Monitoring finances or operation in a non-managerial capacity (Investor-type)</li>
</ul>
<p>H and I got LTCI 11 years ago when we were both 47 - some recommend that is ‘too young’, but you want to buy it when you are healthy and can get a great policy for a reasonable premium. We had no premiums increases, but now have 3 years of premium increases and then it will stabilize again. In addition to being covered for ‘catastrophic’ health care needs, we have enough of daily money to get care in home, even if 24/7. Our insurance was with ‘the gold standard’ at the time CNA - they sold LTCI in 36 states, then they decided to no longer cover LTC and now are big in MD malpractice ins. So we have CNA insurance, but you can’t buy it now for LTCI. We had a window where we could have re-written up our policies for 20 year rate guarantee (we had 10 year rate guarantee), but we would have been hit later with rate increased to cover the company experience rates.</p>
<p>I would check within your state insurance what are approved LTCI companies/policies. Then compare the products. Be careful if you have health issues to apply for the ‘best’ policy, because if you get denied by one you may blacklist yourself from others.</p>
<p>You then have to evaluate if the insurance premiums are worth the coverage.</p>
<p>I got stage III cancer at age 52, and would never have qualified for any insurance after that. We increased term insurance on H at that point.</p>
<p>I also believe in umbrella insurance - we took out with young drivers, but will probably keep even when kids are off our auto policies. My mother’s umbrella policy paid out over $800,000 on a car accident (there was a death) then canceled her (she had $1 million policy limit). We made sure she was unable to reinstate driver’s license and no longer drove after that (she did take some driving lessons with a permit with an off duty police officer) - state of WI wised up with signed/notarized letters informing them about a dangerous person behind the wheel if they reinstated license to her.</p>
<p>@busdriver11 - I don’t know where you got that list from, but I don’t think everything on your list would count towards REP status. And even if you meet the 750 hour/more than half your time tests, that is just the start of figuring out if your losses will be deductible.</p>
Most people say that you should have enough umbrella coverage to cover any assets/future income that a court can award (e.g., I don’t think they go after your primary residence, SS, etc.).
I got a high amount because each additional million is a tiny premium. In my town, people think they’ve won the lottery if they trip and fall on your property. </p>
<p>^ in my state the insurance companies litigate every one of these cases to the bitter end, and they never settle. This actually cuts way down of the number of cases because there aren’t many lawyers who will take a case the will take 3-5 years to settle, and only net the lawyer 8 or 10 grand.</p>
<p>My case took 5 years to reach a trial, and it took the jury 15 minutes to find in my favor. The insurance company paid for everything, and their lawyer got zilch.</p>
<p>@notrichenough, I think that’s one of the real benefits of umbrella coverage. Without it, your interests and the insurance company’s interests might diverge, but not if they’ve got $xM on the line. </p>
<p>Yes, your insurance company is not obligated to defend you. They could decide to just cut a check for the amount of coverage defined by the policy, and then you are on your own defending yourself against the rest. That’s why a $20K liability amount (or whatever the state minimum is) is pretty much useless.</p>
<p>Post 2627 - actually, if the insurance company abandons you and just cuts a check for the policy amount, they are violating their duty to you, and would be,liable for bad faith suit, big time. They may try to so this. If they do, send them a certified letter, or get a lawyer to do it. Their policy includes defense costs, and they cannot legally refuse that. </p>
<p>" You really need a tax pro who is well versed and has explicit experience with this stuff"</p>
<p>We finally got an accountant for the first time last year, and they are very much into that kind of business. But I suspect that all the losses we’ve been piling up over the years, unable to take, will merely help offset all the gains in future years. The rentals are very productive, the rents are going up, and I doubt there will be much to ever consider a loss in future years, unless a disaster happens. And that’s what insurance is for.</p>
<p>But one thing I am interested in, is tax strategies that will be beneficial in retirement, potentially those that would enable early retirement.</p>
<p>@Vladenschlutte , in my experience, the same company will want to cover your autos and homeowners (so there’s no debate about which company is on the hook). Since future earnings are vulnerable, and there is so little additional premium, we’re covered for $5 million.</p>
<p>^^^
As an attorney who spent much of his career litigating insurance coverage and bad faith cases, I can tell you that, as a general rule, the insurer cannot simply cut a check for the policy limits and leave the insured to fend for him/herself. The language you quoted is an example of something called a “burning policy limit.” Burning limits policies are not common, and those that do exist are typically found in commercial lines policies - not personal lines policies like a homeowners or auto policy. </p>
<p>@Vladenschlutte, if you don’t own a home yet, get a higher liability limit on your car insurance and don’t forget to increase when you have more assets. I had a barely minimum and forgot about it and almost had to pay more. You don’t need an umbrella unless you own a home. </p>
<p>Is research assistantship compensation? My kid helped out with research over the summer and got paid. Can she call that compensation and put to her roth account?</p>