Strategy at End of 27.5 Year Depreciation

28 Replies

Originally posted by @Michael P. :

Ps u could move into each house for two years to make it a primary residence to get huge tax benefits

As @Randy Bloch and @Dave Foster  already pointed out, you're incorrect. This strategy does not work anymore. 

Originally posted by @Steve Vaughan :

I've considered offering seller financing to exit.

Will still have to recapture depreciation year 1 (ouch) but will stretch out the cap gain and provide years of cashflow.  

No, you will not have to recapture depreciation in year 1. It is stretched over the ow-fin term. 

To understand the part about moving into a property after an exchange, am I understanding this right.

Say I 1031ed a gain of say 300K  on a property I bought for 300K, depreciated 100K and it appreciated up to 500K into a new property. 

The new property is 500K. I rent if for a 3 years and then live in it for 3 years. It is still worth 500K for simplicity. I now sell after having lived in it for '2 (or more) of the last 5 years'. 

So half or 150k of the gain would would fall under the primary residence exclusion, and half would be subject to the same taxes as any other rental would when sold?

Thanks, Dan Dietz