Finally Sold My Nightmare Property!!! Next Steps????

Question

My investment in Philadelphia has been a money pit.  I had a 3 family property in an awful neighborhood with awful tenants, I was finally able to sell it and now I'd like to know what next steps I need to follow in order to be rid of this experience for good!  SIDE NOTE:  I love Philadelphia and would consider investing there again but not anytime soon :)

I had purchased the property under an LLC (LLC was formed in PA right before I purchased the property) - It is the only property I had owned under the LLC and I'd like to close the LLC as well.

I already closed out the utilities and I went into Eclipse to close out my rental license which had been active (I filed an amendment, they didn't do it, but after a phone call, they finally closed it out).

Before contacting the state of Pennsylvania to close out the LLC I think I need to cancel my commercial activity license.  I was told I need to close out BIIRt first. It's all so confusing....I don't have an accountant, I'm trying to do it all on my own as I have run out of money (I spent sooooooooooo much money on this property, all going to contractors and eviction lawyers....also terrible property managers)

Anyway sometimes in life it's better to do nothing.  What happens if I never close out my commercial activity license or LLC.  Maybe I didn't even need to close out my rental license??? I'm almost sure that I don't owe any taxes since (like I said) this property has been a constant money pit.

Alan Asriants · Answer

Location, location, location!

I will admit, Phila's licensing, L&I, and tax departments are a nightmare to deal with!

Personally I don't think anything will happen if you don't close out your commercial activity license since you wont be uploading taxes and reporting income in the city.

As far as the LLC side is concerned I think it's similar, but I would talk to a CPA

I have someone you can reach out to, he is very reasonable

Rob Lawrence · Answer

I recommend investing in the suburbs of Philly rather than in the city.  Better rules

Pat Hamilton · Answer

@Eric Greenberg

@Herb Lau

I had issues with my contractor and my property manager, but I think I could have handled all of that.  It is to be expected.  I initially thought that by purchasing a 3 family home with 3 different tenants, I'd generally have a positive cash flow.  If one of them don't pay, at least the other 2 would.  I guess I didn't factor in the fact that the tenants speak with each other and give each other tips on how to work the legal system in Philadelphia.  I found myself in a situation where I had to evict all 3 tenants!

I think Philadelphia is nuisance to invest in.....from the rental permit (lead testing) & annual birt and npt tax....it' just annoying paperwork.  Jersey City, for example, is much better!  Less annoying paperwork.

Min Zhang · Answer

Hello Pat! I'm sorry to hear about your terrible experience in Philadelphia. You can consider these options: Cleveland, OH is a cash-cow for out-of-state investors. If you are looking for a ton of cash-flow, then Cleveland is the way to go. But if you're also searching for appreciation, Columbus is the place to be. There are still 1% deals but the more attractive part is Columbus is an expanding city, with several significant companies relocating to the area in the near future, resulting in an abundance of new job opportunities. I can definitely provide you with a ton of great insight about the market.

Anthony Harris · Answer

Pat...this might not make you feel any better but just know you're not the only one. I have a nightmare property myself. After 6 months of free living the city finally got around to evicting my tenants this past friday. To answer your question tho i dont thing there's any penalty to let letting your licence expire.

Alan Asriants · Answer

John Gonzalez - 267-297-5657

Pat Hamilton · Answer

@Alan Asriants

I would love to just do nothing...sometimes it is the best way to go!  Sometimes I'm just too proactive and it doesn't pay.  I think my personal SS# is attached to my commercial license (they wouldn't accept just the LLC's EIN).  With the speed and efficiency of computers (especially in the future) ..... I'm worried that it will creep up on me one of these days.  Just like an old dental bill of $28 (which I wasn't aware of) impacted my credit score a decade ago.  Anyway, I would love your CPAs info.  Thanks :)

Pat Hamilton · Answer

@Troy Sheets

Great advice!  I don't mean to be too down on Philadelphia.  I actually think it's a wonderful city and I'm sad about the experience I went through.  I would definitely consider investing there again one day, but not anytime soon.  I'm now trying to fill out my BIRT and NPT tax so I could close down my commercial license, but even that hasn't been easy.  In addition to paying capital gains tax, I find it annoying to have to pay these taxes...I know I also paid some type of tax at closing.  So far, these are the taxes I think I'm responsible for:

3.278 % transfer tax (Philadelphia tax) - PAID AT CLOSING

1 % transfer tax (Pennsylvania) - PAID AT CLOSING

BIRT TAX

.1415% on gross receipts, and 5.81% on taxable net income

NPT TAX

3.44% of net profits

I of course also have to pay capital gains on my own state taxes (and Pennsylvania State taxes), also the federal tax!

Am I missing any taxes here!  I just want to make sure I comply.

Finally Sold My Nightmare Property!!! Next Steps????

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