Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
1031 Exchanges
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 7 years ago on . Most recent reply presented by

User Stats

16
Posts
7
Votes
Luis Escobar
  • Pacifica, CA
7
Votes |
16
Posts

Tax implications and advice

Luis Escobar
  • Pacifica, CA
Posted
Hi BP community, First time post but I have enjoyed reading and learning from others experiences. I own a 4plex in Fresno and single family home in the Bay Area and just recently sold a property that I profited 209k from. The sell of that property was for 415k total. My original plan was to take the profit and try to go to Indianapolis to purchase a couple of properties cash. I recently found out that to defer taxes I not only needed to utilize all the profit but also replace the debt. So when finding that out I switched my strategy to purchase a portfolio of properties. In doing that I found out from my lender that the max properties I can finance are 4. So in essence for the price range of the homes I have been looking at i am not able to purchase 415k worth of homes while being limited to mortgaging only 4 homes which has left me with the following scenarios: 1) I use all profit and mortgage some properties for a total of about 350k worth of properties. This result approx to 2,500 cash flow after putting percentage aside for maintenance, vacancy, and expenses. In this case would I be taxed 65k? (415k-350k= 65k) if so, what is the tax rate? I have read it could be 30%? 2) find homes that are more expensive to add to 415k value. This is not as intriguing to me because the ROI is much lower. I understand that buying cheaper homes is way more risky but I know folks that had been able to make it work for them really well and is just more in alignment with my risk tolerance. But this may be then most logical option I have 3) I am quickly approaching 45 days and rather than rush into something just pay the damn capital gains tax. On a 209k profit what would be an estimate tax % on that? Thank you in advance for reading and I would appreciate any feedback and perspectives.

Most Popular Reply

User Stats

8,219
Posts
3,722
Votes
Basit Siddiqi
  • Accountant
  • New York, NY
3,722
Votes |
8,219
Posts
Basit Siddiqi
  • Accountant
  • New York, NY
Replied

@Luis Escobar

Welcome to BP!

Did you utilize an 1031 intermediary when you sold the property? If you haven't - you may not be eligible to defer your taxes.

You purchase price of the new acquired properties need to be above the selling price to defer all the gain.

The sale without a 1031 will result in capital gains tax(0%, 15% or 20% depending on your tax bracket).
The state will also tax you for the gain. California tax rates range from 1% to 13.3%

business profile image
Basit Siddiqi CPA
4.9 stars
79 Reviews

Loading replies...