What would you do? Probate and Capital Gains and Multiple Partie

3 Replies

So here's the story. I'm asking for good friend who for some reason doesn't and wouldn't join biggerpockets after we were talking about how great REI is. He was asking me what I would do.

His father bought a multifamily under a private mortgage 42 years ago for about 35k. From what he knows it never had a refi nor money has been taken out. I assume his Capex averages to about 6% per year and the valuation today about 1.2- 1.3 million. Unfortunately his father passed away leaving the property divided in 4 ways.

Him 64%

Person B C and D 12% each.  

Right now the will is still being processed though the surrogate court but when it's all done He's not sure how to handle this.  

Option A try to buy out B C D after they pay their % of the capital gains tax if they're willing.  The question is what tax implications would He have if he pulled from his growing money market. I don't know what his initial investment is but he thinks it should be more than enough to cover it.  

Or

Option B 

Sell the property pay his % of the capital gains and reinvest.  He wants to know can he take advantage of a 1031?

Obviously, I don't know how to answer but maybe someone here does.  

Oh fyi, this is in the "tax haven" we call New York.... 

There is no capital gains tax for the sale of that property, not federal anyway.....heirs get a “stepped up” basis, as if they bought the property for market value. 

He needs to talk to a cpa, his probate attorney would know this too. 

Originally posted by @Gregory DeRosso :

So here's the story. I'm asking for good friend who for some reason doesn't and wouldn't join biggerpockets after we were talking about how great REI is. He was asking me what I would do.

His father bought a multifamily under a private mortgage 42 years ago for about 35k. From what he knows it never had a refi nor money has been taken out. I assume his Capex averages to about 6% per year and the valuation today about 1.2- 1.3 million. Unfortunately his father passed away leaving the property divided in 4 ways.

Him 64%

Person B C and D 12% each.  

Right now the will is still being processed though the surrogate court but when it's all done He's not sure how to handle this.  

Option A try to buy out B C D after they pay their % of the capital gains tax if they're willing.  The question is what tax implications would He have if he pulled from his growing money market. I don't know what his initial investment is but he thinks it should be more than enough to cover it.  

Or

Option B 

Sell the property pay his % of the capital gains and reinvest.  He wants to know can he take advantage of a 1031?

Obviously, I don't know how to answer but maybe someone here does.  

Oh fyi, this is in the "tax haven" we call New York.... 

Like mentioned here, there will be no capital gain so no need to do 1031. 

The question is does he want to keep the peopery? There will be very minimal tax or even loss with selling expenses  if he sell the  property right after it is probated.