First Response From First Mailing Campaign

[Kevin Barrett]

I recently mailed out a batch of YLs and received my first call (well, Google Voice Voicemail) today. When I called the seller back he told that he was interested in selling, but he stated the following:

"I've owned the property for over 30 years…Am I going to get killed by taxes if I sell? If you can answer this question for me we can further this conversation if my gains don't take a huge tax hit."

I advised him to speak to his accountant after I asked him if it was his primary residence and he said it was not. He reiterated that if I could come up with the answer to how taxes work for non-owner occupied homes then we could continue on.

I understand that taxes depend on a person's entire portfolio and if the seller has owned the property for many years then depreciation comes into play, but is there any general information people can share on taxes on non-owner occupied residences?

[Bill Exeter]

Hi Kevin,

Telling them to call their accountant puts additional burdens (road blocks) on them. They will likely fall under one of two scenarios (in most cases). One, the property is owner occupied and they may qualify for the 121 Exclusion ($250/$500,000 tax-free exclusion). Or, two, the property is held for rental or investment or use in a business and they qualify for 1031 Exchange treatment. If you can help them with the initial concept and get them excited, they will be more likely to call their accountant and decide whether to proceed.