I'm very new to this space. I posted my intro on the new member forum 5 seconds ago! So I have a condo that I rent in Seattle which has a tenant in it. This tenants lease is up soon and I want to sell the property to use the capitol to start fixing and flipping. Can I just do this? Are there landlord/tenant laws that say I have to give her 90 days or something? I cannot find mention of this in my lease with the tenant.
Also an advanced tax question if anyone has a similar situation to me. My wife is from Sweden and is on the loan. She has technically "moved back" to Sweden on the books and I've heard she may need to pay Swedish taxes on the capitol gains after sale of the condo. Can I just take her off the loan? Can LLC creation help? Again totally new and don't know much! :) Thanks!!
Seattle requires 60 days notice that you will not be renewing. Check with your CPA about the taxes. All the best and welcome!
probably best to ask an attorney or RE agent that specializes in investments and condos for this one.
That said, here is my totally amateur understanding In seattle the "just cause eviction" ordinance says you can give 90 days notice for sale of a SINGLE FAMILY HOUSE if you want a month to month tenant to vacate. Condominiums in seattle DO NOT HAVE THIS OPTION. You can't legally force a monthly tenant to move out to sell a condominium. Refer to seattle's just cause eviction ordinance for details.
If they are on lease, and the lease terminates without automatic renewal then my understanding is you don't have to do anything except notify the tenant you aren't renewing. I could not find any reference to prior poster's 60 day comment, however it may well be true and in respect of your tenant and for honest business practice, giving your tenant as much notice as possible should be done. If the lease converts to month to month, then you cannot force the tenant to move out for the sale. Your only option is cash for keys. Maybe the tenant would be interested in buying the place, or depending on where/what of the condo, it may be possible to sell it to another investor with tenant in place.
On the swedish taxes thing, I have no idea :)
Firstly, welcome to BP!
Secondly, I think the tax you are referring to is what we call FIRPTA (Foreign Investment in Real Property Tax Act). The FIRPTA Certification requires that if a selling party is a non-resident for purposes of U.S. income taxation, a portion of the sale is withheld. Escrow would withhold 15% of the amount realized and pay it to the IRS if this applies to you. I think you'd really need to check with an accountant or attorney to know for sure. Being that both of you are on the loan, I don't know where that would put you.
Also, here is an idea. Instead of selling your condo and using it to fix and flip, why not leverage it with a HELOC, refinance, etc.? This would avoid having to pay taxes on any capital gains since you are using the condo as an investment property, and you would retain the asset which someone else (your tenant) is paying down the loan balance. Just food for thought :)