Should I do a 1031?
I know that most of you HIGHLY recommend doing a 1031. But I am currently in a situation that I am just considering paying the Capital Gains Tax and be done with it. So I want some differing opinions.
First off, the property is owned by our Family Trust and is free and clear. We settled on a selling price of $750,000. Just rounding numbers, net will be $700,000. It was purchased for $250,000, so that leaves $450,000 plus depreciation for NET. I am not sure how much was depreciated as I have not seen my parents Tax Returns, but even if it was $100,000, that leaves a Capital Gains tax of $82,500, leaving us with $617,500 TAX FREE.
The reason for paying the Capital Gains Tax are many. There is a good chance that the Capital Gains Tax may increase, and maybe to as much as 50%, from the current 15%. We want to purchase several SFR across several states and trying to close all of those within the 1031 time frame would be difficult. The sold property is in California and the accomodator fees could reach over $10,000.
The last, and MAIN reason, for just paying the taxes is that my mother is Terminally Ill and my father has advanced Alzheimer's. I did a 1031 for them last year, but I couldn't get my mother to agree to buy a second property, so she got some taxable BOOT back. Luckily, it was less than $10K, so not too much of a problem. But trying to get her to agree to buy new properties was like trying to get a Democrat to cut Social Program Spending. Possible, but not likely.
My goal is to buy 20 SFRs in the 50-60 range with around 50% LTV mortgages. To 1031 ONE to TWENTY would be daunting.
Any thoughts?