All Forum Posts by: Adam Purden
Adam Purden has started 1 posts and replied 5 times.
Post: Anyone out there using Zumper? Thoughts?
- Posts 5
- Votes 4
I know this is an old thread, but I thought I would reply as I believe my experience with Zumper is very relevant to this discussion. I recently listed my property here in Southern California on both Zillow and Zumper. I received 75 contacts on Zillow and zero on Zumper. Zillow rental manager is completely free and it provided contact information for each of the people that reached out to contact me. I’m going with Zillow over Zumper 100%!
Post: Would you do a 1031 Exchange if you were in our shoes?
- Posts 5
- Votes 4
Question for the group...
If I take $20,000 from the 1031 exchange for "boot" money, will the government want that entire $20,000 back when I file my taxes because I had $50,000 in depreciation recoup to pay? Or do they only take a % of the depreciation recoup?
Post: Would you do a 1031 Exchange if you were in our shoes?
- Posts 5
- Votes 4
Quote from @Bill B.:
The numbers I come up with:
You sell for $380k minus commissions of $22,800(let’s say 23k) minus $17,000 in closing fees and concessions!?!? (This seems INSANELY HIGH.) means you net $340k after commissions and costs. You owe $96k so you could walk with $244k…
You owe capital gains taxes at an assumed rate of 15% on $340k minus $130k or $210k. So that’s $31,500 owed.).
Let’s pretend you depreciated the entire property with no land value as part of an Hoa/condo. So you wrote off 3.636% of $130k per year, ($4727) times 12 years ($56,727) so you owe 25% on that ($14,181).
So I come up with $45,700 owed in taxes (plus California’s grab) and you walk with $198k give or take (minus California’s grab.) You can get a $46k discount (plus California’s grab) off any investment property you could identify in 45 days or less and close on in 180 days or less as long s it costs at least $340k and you put down at least $244k.
That’s a pretty healthy discount if you can find something. Otherwise assuming a $30k downpayment or less you still did ok with a 550% return after taxes in 12 years if you made zero while you owned it. (Almost 18% annually)
PS. I’m NO accountant, and I don’t pay state income tax. So maybe I’m waaaaay off. But if I’m not really far off you really need a different accountant.
I don't know how, but my accountant is calculating that I would owe around $45K to the IRS and around $26K to CA. But that's only $71K and she said I would owe closer to $80K... I also have $14,500 in repairs this year I can apply against taxes and I asked if she factored that in and she said "yes".
Also, where are you getting a $30K downpayment and zero while I owed the property? I wasn't getting that part...
Thanks!!!
Post: Would you do a 1031 Exchange if you were in our shoes?
- Posts 5
- Votes 4
For clarity for those questioning the numbers... I re-did the math. I'm not sure how my accountant came up with $200K net to me after taxes, based on my breakdown below. I am coming up with $164,200 after taxes or $244,200 rolled over. Does this change anyone's thoughts?
Total Sales Price = $380,000
Less $96,000 owed on mortgage (Condo was originally purchased at $130K)
Less $22,800 for the realtor fees of 6%
Less $17,000 for estimated closing costs and other fees and concessions
Less $80,000 in Taxes (Taxes include depreciation taken over 12 years, plus capital gains taxes)
= $164,200 Net Profit
Or $244,200 rolled through a 1031 exchange into the new property.
Post: Would you do a 1031 Exchange if you were in our shoes?
- Posts 5
- Votes 4
I am in escrow on a condo we are selling for $380K. We have had so many HOA plumbing/pipe issues over the years and we are just tired of the headache. After three major water remediation and renovations, we are over this property and want to move on!
I owe approx. $95K on the mortgage before the sale. In speaking with my accountant, I would owe approx. $80K in taxes if I keep the net proceeds (because I have been taking depreciation on my taxes over the years). I am calculating that would leave me with about $165K after taxes, realtor fees, and closing costs are taken out.
We are considering doing a 1031 exchange where we would put the entire $244K as a deposit on another property. We are considering a single family home this time, so if any plumbing or repairs are needed, we can make the repairs and NOT worry about having an HOA put a band aid on their own pipe (i.e. clamp instead of replacement). A somewhat decent single-family home in our area will cost between $650 - $700K. Let's go with $675K for calculations.
So at $675K with a $280K down payment, I calculated our monthly payment would be approx. $2,850 per month... And we would likely be able to rent it for $3,200 - $3,500 per month.
SO THE QUESTION IS... If you were in our shoes, would you cash-out and pocket the $165K (after tax deductions)? Or would you purchase another investment property? We would plan to keep it long term with the hope that we would never pay deferred taxes on it.. but who knows what life may bring.
(We also own another rental property (single family home), so this isn't our first rodeo... We plan to keep that one till we die.