patrick.net

I had to look up ADU
HunterTits says

Any other holes in this?

Only establishment politicians are allowed to get creative with technical nonexistent loopholes and get away with it.
There's zoning laws and IRS laws as well as State income tax evasion, if I had to guess.

HunterTits says

they will pay income tax in the state they officially have residence in.

But they'll have a CA dirver's license (if I understand you correctly), which could be very difficult as the state of California will definitely be gunning for you. They'll try to nail you down as a part-time resident. Would it be 1099 or W-2 income? Here's what the FTB says:
Part-year resident
If you lived inside or outside of California during the tax year, you may be a part-year resident.
As a part-year resident, you pay tax on:
All worldwide income received while a California resident
Income from California sources while you were a nonresident

At a company I used work during the wild west dot com days, anyone who lived out of state had to work out of an office that was not in state (as they would occasionally show up for work in CA). This was to protect both the worker and company. The worker was officially transferred to the Nevada office (so he could "enjoy his stock options", unimpeded by CA taxes).

HunterTits says

In fact I was quite clear that you would.

You were! As you can tell, my mind went elsewhere (and reading comprehension went out the window). Hmmm... might work (but CA income and capital gains taxes are not trivial).

HunterTits says

EBGuy says

But they'll have a CA dirver's license (if I understand you correctly), which could be very difficult as the state of California will definitely be gunning for you. They'll try to nail you down as a part-time resident. Would it be 1099 or W-2 income? Here's what the FTB says:
Part-year resident

So? I never said you wouldn't pay California income taxes. In fact I was quite clear that you would.

You also said "I would pay $300/month for that. Esp if I moved to a no-income tax state."

What's the point of this exercise if you still have to pay CA tax?

What are the numbers?

How much do I save or come out ahead on if say, I make $200k permanent remote "living" in San Fran?

HunterTits says

WineHorror1 says

What are the number?

How much do I save or come out ahead on if say, I make $200k permanent remote "living" in San Fran?

You don't remote in San Fran. Read what I wrote.

That's why I put "living" in quotes. I think you're idea is very interesting and if I thought/think I can actually do it, I might. You're idea is to make your employer believe you live in a place like San Francisco or other high cost area, correct? Once he/she believes that, your pay goes to the standard of that area, correct? BUT, being the smart fox that you are, you actually like in Podunk Alabama and live high on the hog, correct? If I got all of that correct, what are the numbers on how I make out like a bandit?

Question: can the IT department of the employing company determine where are are working from via your IP address? Would that kill your idea?

How will you file your state and federal taxes? Will you pay taxes to both states? I'm not sure if you need to tell them what state you domicile in on federal taxes, but if so, what would you say?

I believe state and federal tax info is all shared back and forth and scanned for discrepancies as audit flags. Not sure if this could cause that.

I've heard domicile laws vary by state, and often use a days per year test.

i don’t see savings. pretty easy to rent a closet in an office building somewhere for an address.

might work better if you rent fictitious address in Florida to not pay CA taxes… at least savings.

HunterTits says

Hircus says

How will you file your state and federal taxes? Will you pay taxes to both states? I'm not sure if you need to tell them what state you domicile in on federal taxes, but if so, what would you say?

READ. I already explained all this. Twice now, I think.

No you didnt.

The Khalifa Babylon - Come out of her my people!

"Eh, there is such a massive collection of vehicle manufacturing and machining in Detroit, there's simply NO WAY my real estate holdings here will ever go down" - Detroit Real Estate HODLer, circa mid 70s.

"This is the bread basket of the Mediterranean. There's simply no way my olive groves here in Sicily will be worth less over time." - Sicilian, 1800s.

Sicily is really amazing, it truly was one of the most desirable locations for thousands of years. Now they can't give properties away. Small Islands that boasted tens of thousands of people not a century ago have to be evacuated, because the only ones left are a hundred or so elderly people and it's too expensive to supply them or get medical care there.

HunterTits says

Hircus says

No you didnt.

Oh yes I fucking did. Or it should be obvious based upon what I wrote.

You said vaugaries about paying taxes to 1 or 2 states. You said nothing of my question about federal.

Dont be such a twat.

HunterTits says

FortwayeAsFuckJoeBiden says

i don’t see savings. pretty easy to rent a closet in an office building somewhere for an address.

might work better if you rent fictitious address in Florida to not pay CA taxes… at least savings.

You don't get it. Just proved it by what you just typed.

you asked, i answered, you complained… have it your way. don’t care

whatever you say. have fun if you get audited.

https://www.hcd.ca.gov/policy-research/accessorydwellingunits.shtml?source=patrick.net#adu

Questions I have...

1) would you have to pay taxes to 2 different states?
2) it would be in the ADU owner/subletter's best interest to make some kind of spreadsheet that would convince potential clients
it is worth doing, don't you think? If everything checks out, yes, I think this could be a great money maker.
3) Yes or No? Would tracking your IP address (every remote worker is going to be working on a computer) give your working location
away to your boss/IT department? If so, would this kill the idea?

WineHorror1 says

Would tracking your IP address (every remote worker is going to be working on a computer) give your working location
away to your boss/IT department? If so, would this kill the idea?

The ADU has a little server room that hosts VPN software. ADU renters would get access to the VPN so it looks like you have a local IP address.

Might as well do it in East Palo Alto. Nobody would notice the continuous rotation of occupants or if you stuff 5 or 10 people in the ADU.

Aren't there laws regulating how many people can legally live in a unit of a certain size?

Sure, slumlords violate them all the time, but if we are talking "strictly above the board" model this would be one of the obstacles.

Why do you need an ADU?
The ADU most likely wont have its own address number, like 921-B or 922 if the main house was 921.
Why not just set everything up in a SFH inside the main house?

And to answer your question about the IRS laws being broken, just wait until they audit and find out you don't actually have an Office that you're adding to your itemized deductions.

HunterTits says

READ. I already explained all this. Twice now, I think.

You have not explained Jack SHIT! You put together a loosely hobble thought about using your shed out back and putting in a bunch of computers and a fast internet connection, and then renting those remote workstations out as physical locations, for dishonest scofflaws to use around the country to evade local, state and Federal income taxes. What you're proposing isn't like a PO box.
Now that people are asking questions trying to understand what you're trying to do, you snap back "Read the damn thing!".

All we're trying to do is understand what we already read, do you want input or not? If anyone misunderstood what they read, then answer their question and enlighten them. Just barking out "Read the damn thing!" isn't a productive answer.

I would be bet that people are asking questions or making comments because it sounds like a workable idea. If the idea were to hold up, I'd be very interested in investing/partnering.

I haven't paid attention to where every Patnetter lives. Who is on the ground in SF, Palo Alto etc? Maybe there is even a Patnetter who has something to rent? But then, I guess they could simply run with the idea themselves.

1 more question: would the subletter face any liability for, well...are there any unknowns?

HunterTits says

<--- fact, not opinion. You really fucked up TPB. It is embarrassing to see.

I see your problem, you write a hairbrained idea using abbreviations not everyone in the country understands, you say you would put remote access in the ADU(from what I found that's a shed or a detached dwelling, am I correct?).
You really didn't explain who your customer would be, or provide any use case when people try to connect the dots on their own. You then accuse them not reading it. Then rather than providing clarity, you go on to quote all of the bits that made you upset and made quips about them, rather than providing feedback.

Admit it, you're not looking for advice, opinions, or collaboration on your idea. You just want to bitch the responses to your threads. You've got a little bit of a Contention problem!
You're not sure why you're arguing or to what end, are you?


OK great one! Enlighten me, why in the fuck would I load my fucking shed out back up with hundreds of remote access, if not to run a virtual PO box remote office sort of deal for evading tax laws and defrauding City and States.

I'm not necessarily knocking it from your side, but it sure sounds like your Customer use case would be a scofflaw. And when they go down, they'll bring the whole load of poo water to your front door.

HunterTits says

WineHorror1 says

3) Yes or No? Would tracking your IP address (every remote worker is going to be working on a computer) give your working location

Who is going to track it? And it can be spoofed with a VPN. My VPN shows me being in Toronto, Ontario, for example.

Here's the thing here, you'll need two VPNs. The first is the one which boots up with your desktop and the 2nd, for the work itself (usually given by your firm's IT dept) on the same hardware. Sometimes, these things can conflict in terms of security settings between the differing software tools.

A better way is to get a Virtual Hosting Server where in effect, your workstation is on a server farm somewhere in California and then, using your home PC, you log onto your virtualized workstation & then, you separate your work & home computing environments completely. By doing all, all your IT updates and packages get delivered to a remote desktop far away from home and then, your IT dept knows nothing about you.

I believe the objective of the post is to earn higher California pay and pay lower rent in a cheaper housing preferably in a state with no income tax.

At first I was confused because I didn’t know if the higher pay in California is worth the state income taxes one owes on income derived from California.

The difference to decide may depend on the other sources of income one might have besides his labor, e.g. dividends, capital gains and interest.

For example, one could be a Florida resident and have $50,000 income from dividends and etc. and owe no California tax on this money.

But I’m not sure how it would work because the employer will use the California address for the W2 and 1099.

I met several people in Baja California Sur Mexico who worked remotely to take advantage of much lower housing prices; they were from Vancouver, Portland, Europe.

Of course they had other reasons also.

I’m dealing with the problem a bit myself because I need to renew my drivers license in a couple of years even if I don’t spend much time in Florida.

I think the ADU scheme would work.
But would subletting your own house also accomplish the same thing? And how many times can you sublet your house? Is there a limit?
Because the real purpose of this arrangement is secure a legitimate physical mailing address where mail and documents can be delivered and residence established. An enterprising home owner could “sublet” in this way to as many remote workers as necessary. Maybe just not from the same company.

HunterTits says

The math difference can be immense. $200k vs $120k or even less. So if there are complications with the home office deduction from this...guess what, fucking forgoing said deduction is probably more than worth it

This is the kind of math I want to know more about. At what numbers does it make sense for someone to want to do this? Once we know the numbers, we can then target the client base and market. It would be a good idea to partner with, or have on retainer(?), an excellent tax attorney/preparer.

Shaman says

Maybe just not from the same company.

Good catch. Yes, this would be very important.

How big is the market? I suspect it is more than just California this would work in. Probably many many large cities. Come on guys, let's get something going.

HunterTits says

Ppl work from the out of state secondary homes all the time, ppl. So Podonkia will collect my property taxes on it and just call it a day.

Homeowners tax exemption is something to factor in. Not a huge break anyway, but you'd have to pay higher property taxes in Podonkia if I'm following correctly. So primary is in high pay CA, but you don't actually live there and can utilize the space when required for the occasional quarterly meeting to stay at or whatever and earn more money because of COL. Spouse can work in income tax free Podonkia AND your house is substantially cheaper than CA. So the $300/mo on the ADU is not a big deal.

Not a dig, but I'm reading what you're saying, but it's not 100% clear to be honest.

If I'm understanding correctly this is what I think you're talking about:

Work in silly valley, but are allowed to work remotely, but pay is based on where you live.
If they know you live in Milton, FL where you can get a $200-250k house, they pay you less working remotely?
You get the job and say you live at 123 Maple Ave in San Francisco at the ADU.
You get your 6 figure job in CA and have a cheap house/COL somewhere else.
If married spouse can work in FL and have no income tax, while you still technically live in CA and pay their taxes.

If I'm following it's somewhat similar to trucking companies getting Maine license plates for their trailers. They don't live or reside there, pay the registration fees to Maine and any other applicable taxes, but it's substantially cheaper than say getting registration in IL or CA if you're the trucking company.

Basically I fly out to CA, get a job with Apple. I rent the ADU and list that as my W-4 address, but I'm really living in FL and Apple allows me to work remote. I pay CA income taxes on my income, my spouse pays no FL income taxes if they work in FL. You then get a cheaper house than you could get in CA but Apple thinks you live in CA for the $300/mo.

On the business side you're renting out a single ADU to multiple people in CA and raking in some income as no one generally will use it and you likely won't get caught as long as you document the rents and pay appropriate fees/taxes. It makes sense if I'm following correctly. You generally have to just provide gross income on rentals, you don't have to report the leases or number of "tenants" so to speak.

Audit issue I see is if the gross ADU rental is insane. If there's a red flag on your taxes, an ADU getting $15k/mo is just that, a red flag. IRS can/will do a quick GIS map search of the property and know that income is way more than should be coming in. The renters paying $300/mo would have to not write of the cost as you kind of mention. IRS will flag that shit in a second if 50 people write off a lease at the same address and it's discovered it's an ADU.

It make sense for as long as it's allow and you're prepared for legal fees. Just because something is legal, doesn't mean a local muni or state will not try and take you to court over it. It does sound like a good idea or a win/win for homeowners with an ADU and the remote work employee. Hell even the employer as they'll have a happier employee likely having an employee living in a lower COLA, but they would necessarily know it's basically a BS address.

TL:DR - It's a good idea for property owners with an ADU. I'd be careful with "over renting" so to speak would be the only suggestion. Or buy the house in an LLC as you say, rent the main space and then an ADU. This is actually a great idea if I'm getting the idea correctly.

I don't think I would want the 'proxy liability' if these timeshare renters don't pay their taxes, commit crimes, use the place as a cover for illegal activities etc. especially if you are giving them an address (yours) to exploit as flybys? It sounds like you are renting out your address more than renting out a space to a variety of John Does, with the space itself as a pretense for temporary rental. What process would you have to implement to vet these guys? It would cost more than $300 a month to require them to carry their own insurance, which would be defined as what exactly?

Sometimes if officialdom comes sniffing around to skip trace a timeshare guy using the address, they might just think the owner is the next best thing to arrest or extort. Insurance would be a nightmare. The 'clients' are all scattered to the wind, but you are standing there with the official bullseye on your back for every obscure regulation and requirement that a predatory bureaucrat could drum up. I can't see keeping something like this 'under the radar'.

When I had business at a specific leased address, the first thing I noticed was that I was a sitting duck target of every regulator, tax shill and fee bandit who was aware of my address, which I had to promote to promote the business. I remember getting all of those dunning and tax letters for employees who only were there a short time. Having a bunch of people funneling through an address with you holding the bag for the address itself does not sound like something that would last long without negative consequences.

There are generally rules against renting to groups where the number of people is greater than (the number of bedrooms + 1).

Could be a problem.

"ADU owner 'rents out' his unit to an LLC/Corp entity." Whose name is on the ownership for the main property, which I assume also holds equity in the property (or not)?

How legally impenetrable is this corporate 'shell', or will there be different layers of corporate shell to create a legal fortress from assault that would exhaust seekers of liabllity, tax liens, contractor liens etc.?

I think this is something you would exploit for a calculated time before the temperature started going up, and then abandon, or shift to another address to rinse/repeat trying to stay ahead of any generated wolf packs, kind of like a boiler room operation.

HunterTits says

Patrick says

There are generally rules against renting to groups where the number of people is greater than (the number of bedrooms + 1).

Could be a problem.

Where is that happening when the landlord is only renting out to a single tenant, the LLC or whatever? :)

The total number of people living in a dwelling are the deciding factor ultimately, no? No matter how you structure the entities in between. Also maybe neighbors will tell on overcrowding? The govt will keep looking the other way for migrants but as soon as fucking white males are profiting from it they will shut it down. Interesting experiment, but I'm sure in most of the bay area it's already violating some short term rental law. I can see it working in big cities with looser laws

Seems there is a fraud argument in there somewhere. These 'workers' really don't reside there as an official address any more than they reside at a hotel they took a hooker to for an hour or a post office box, but are representing it as the address they use during employment for residency and tax purposes. If fraud unwinds the corporate shell, then liability goes right back to property owner?

Avoiding the liability magnet appears onerous and unworkable in the long run, unless there is a babushka doll series of corporate entities that are too expensive to pursue. Who would want to get bogged down in any kind of lawsuit or government agency attention/ suits for $200k a year, and threaten whatever equity might be held in the property proper? The payout would have to be higher, and the risk lower to consider it. It sounds like it is scaling up liabilities against a frail ADU LLC pretense, without an adequate payout. I don't see the long term net vs. risk, effort and potential trouble. It also sounds like a cover operation for foreign labor which could have other legal ramifications.

In Santa Cruz, some Mexicans run an illegal alien 'hotel' across the street that has been there ever since we have had our place. There are cars and trucks all over the place, and two Mexican women who go on 'outcalls' of some kind in a Nissan Rogue. They keep a tight lid on the place, no noise though once in a while a drunk might come out and stumble around. I think the trucks are leased to the migrant illegals who use them to do labor, and it is basically a worker's hostel. I have never seen them get in trouble over it, but who knows, I imagine they do all cash business and employment outcall to keep them 'under the radar'. Once you start getting into SS numbers, tax ID's, 1099's, etc. the can of worms can grow.

so you want to rent your backyard shed to meth heads, and you want to know if that would be cool?
Then you go on to say those meth heads could sublet to all of their street buddies.
How could you possibly lose?

HunterTits says

An Idea That Apparently Is Too Hard To Grasp For Some Patnetters

Ceffer says

for $200k a year, and threaten whatever equity might be held in the property proper? The payout would have to be higher,

30 ADUs at $5,000/month. 50 people/ADU paying $300/month. The math is $150,000/month for ADU rent with $450,000/month coming in to the LLC/Subletter. LLC income per month = $300,000.

HunterTits says

Rin says

Here's the thing here, you'll need two VPNs. The first is the one which boots up with your desktop and the 2nd, for the work itself (usually given by your firm's IT dept) on the same hardware. Sometimes, these things can conflict in terms of security settings between the differing software tools.

A better way is to get a Virtual Hosting Server where in effect, your workstation is on a server farm somewhere in California and then, using your home PC, you log onto your virtualized workstation & then, you separate your work & home computing environments completely. By doing all, all your IT updates and packages get delivered to a remote desktop far away from home and then, your IT dept knows nothing about you.

Ok. Perhaps I am missing something here, but why would I need that?

I go to a park. Use my cellphone Hotspot to work remotely. Does that mean my legal residence ...

If your firm's IT & HR depts don't run reports on login data then yeah, it doesn't matter.

On the other shoe, there are companies which do log info on their telecommuters like IP, logon duration, & even activity and run audits.

Now, since many companies have their telecommuters download their own VPN client w/ specific security settings for the firm, applying one's own over that, may be difficult.

So if you're in a park in Lafayette Indiana or an hour away at home, in let's say Indianapolis, & tell your Santa Clara CA firm that you're in California, eventually IT/HR will flag that at least 80+% of your logins were coming from Indiana and not Silicon Valley.

If you buy a 7x24x365 hosting service in LA, however, your private server running Windows 10 will always be in SoCal so you can remote desktop with your own laptop's internet connection plus VPN whether it be in Lafayette, Indianapolis, Honolulu, Toronto, Little Rock, and the HR folks will always believe you're in SoCal. The firm's VPN will stay on that hosting server to form that tunnel to the corporate LAN.