Tax, SDIRAs & Cost Segregation

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Olga Daisel
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Need help on finding CPA and tax questions

Olga Daisel
Posted May 25 2023, 10:13

Folks,

I need help with the following. I made a move and gave 50k deposit on a new construction condo in 2019. It was built last year and I became owner in October. Technically speaking I invested only 50k there,and it was invested for 3 years. If I sell it now, would it be short term capital gain?

Now, can I do 1031 exchange? I literally can't find any tenant there and I don't want to be hammered with tax.

Yet another question, how do you find a good CPA? Should it be a tax attorney?

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Chris Picciurro
  • Accountant
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Chris Picciurro
  • Accountant
Replied May 25 2023, 13:12

Great questions and I have owned a CPA practice for over 20 years. Here is my advice: work with a CPA that specializes in real estate. Make sure the firm can look at your current tax situation and run a tax projection based on your potential sale. Then have them discuss tax planning options and determine the related tax savings. If you have any other questions feel free to DM me. Good luck!

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Curt Riffel
  • Accountant
  • Dallas, TX
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Curt Riffel
  • Accountant
  • Dallas, TX
Replied May 25 2023, 13:28

@Olga Daisel

I am located in Frisco, TX. I have an MS in Accounting, a CPA license, and prepare tax returns for real estate investors. Also I'm friendly and easy to work with.

We specialize in multifamily real estate syndications, but help a broad range of clients from SFH rentals, commercial, business owners, and general high net worth individuals.

I agree with Chris above to run some projections to see if it makes sense to complete a 1031 exchange or not or if you are eligible.

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Dave Foster#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
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Dave Foster#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
Replied May 25 2023, 14:36

@Olga Daisel, Whether or not you can do a 1031 exchange is largely dependant on your intent in purchasing the new property.  It must have been your intent to hold that property for productive use.  And while there is no statutory holding period.  You do have to be able to demonstrate that it was your intent to hold and what the compelling reason for the change of intent was.

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Michael Plaks#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
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Michael Plaks#1 Tax, SDIRAs & Cost Segregation Contributor
  • Tax Accountant / Enrolled Agent
  • Houston, TX
Replied May 25 2023, 14:58
Quote from @Dave Foster:

@Olga Daisel,  You do have to be able to demonstrate that it was your intent to hold and what the compelling reason for the change of intent was.

Dave, in my lifelong experience, women always have a compelling reason (or several) for changing their minds ;)

Olga - before talking about an exchange or anything else, someone has to figure out what is your "tax basis" and taxable gain on the potential sale. We cannot do it from the partial story you shared, it takes a more in-depth conversation about the deal.

As to finding accountants, BiggerPockets has a directory: https://www.biggerpockets.com/...

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Dave Foster#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
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Dave Foster#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
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Replied May 25 2023, 14:59

@Michael Plaks, Dave - slowly backs away to avoid the lightning!!!

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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
Replied May 25 2023, 17:30

@Olga Daisel BTW, you’ve only owned it since October, 8 months or so, so your holding period is that….not when you put down a deposit.

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Olga Daisel
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Olga Daisel
Replied May 25 2023, 19:08

@Wayne Brooks

Logically speaking any other asset that fixes funds for extended period of time is long term capital gain. Just trying to see if this applies too. I don't believe it does though.