All Forum Posts by: Bill B.

I was going to say remember you may still owe 25% tax on the depreciation you declared, especially if you owned it for years. I guess the “good news” is that you may avoid that tax if you sold at a loss even including the depreciation. 

@Account Closed

No, no, no. Don’t do it frank. This is part of that Infinite banking idea from years ago. 

Interest rate will be way too much higher to make the payment getting there a week or two early help. Plus if anything comes up in your life 5-10-15 years from now you’ll have the lower rate loan locked in  

Just print out an amortization table and make the extra payments to pay off the mortgage in the time period you want. 

Ps. If you test different amounts and starting and ending the extra payments at different times you’ll notice that each additional dollar you pay in advance saves you less and less money. Also paying an extra $1,000 early will save you more than paying that $1,000 a few years later. Toward the end paying extra is almost not worth it. 

Pps. If you have multiple mortgages or loans at different rates pay the highest rate first obviously. But an overlooked fact is if you have more than one at the same rate, pay them each an equal share of the extra payment rather than paying all the extra to one loan as this will save you more as well. (See note above about earlier extra payments being worth more when trying to figure out why which payments go to which same rate loans saves you more or less money.)

@Steve Genna

Hey Steve. If it fits your budget and property type I’d look at the fourplexes at the north west corner of Maryland and hacienda if you think that’s close enough to unlv to get students interested. It’s a gated fourplex community with an Hoa. 

@Tony H.

The percent of value assigned to land going from 20% to over 40% make no sense. If your neighbors houses are similar to yours you could look up their tax assessments online in most areas. 

Ps. You couldn’t have used that new in 2018 data  if it came out after you filed your taxes. Are you planning to amend your 2017 and 2018 taxes when the value changes again next year?

You used the data available to you at the time you filed your taxes. 

I would just hang on to that assessment form from 2017 and file it away with your tax records. (If you don’t have it anymore it can probably be printed online or you can visit the taxing authority and ask for a print out of the 2017 assessment. 

@Tony H.

The $50k was the land value out of $253k current valuation (right in line with the 20% I suggested btw @ 19.8%. 

That means MAYBE the land value should have been $60k out of $300k. I don’t think anyone in their right mind would say you paid $47k more than the assessed value (which means nothing in many states as it’s only meant to be a small fraction of true value in places like Las Vegas) and the land went up $80k (from $50k to $130k) while the building went down in value $30k (from $200k to $170k). 

There’s no way I would bother amending my taxes when your answer was probably closer to correct than the new property value. Worst case, you are depreciating an extra $10k in property value ($60k instead of $50k) over 27.5 years. An extra $363/year deduction, saving what, $70/year in taxes?

If you feel like the building is worth way less than $200k or the land is worth way more than $100k, ammend your taxes. Otherwise it’s a judgement call.

Ps. None of this is legal, tax, or professional advice as I’m am neither inclined nor qualified to give it. 

As a non-lawyer non-cpa. I would say you used the best possible information at the time and leave it as is. Unless your land is very valuable and your building is almost a tear down 20-25% of the purchase as land value as been my norm except townhomes or condos where you literally zero or near zero land. 

You’ll owe 25% of the amount you depreciated in 2018 in tax when you sell. 

IMO: if your gain after sales costs is over $80,000 or you don’t like renting it out, I’d sell now. Why be a forced seller next year when you can take your time this year. If it’s a lower gain then the tax savings don’t matter as much, they will only be taxed at 15% usually. 

If she needs money take out a loan against it and keep it. Get a full service PM if it’s a drain of her energy. If not, do nothing.  All those taxes go away when she dies. If she wot have enough money for her new home that way ], do a 1031 in to another 4plex in new city. Ps. Don’t forget 1/4th of those capital gains are tax free if it’s always been her residence. 

If at all possible go with the house or even the townhome over the condo. Too easy for the condo to change the rental rules or have a profit biting Hoa fee. 

A 1500sf townhome (1 of 2 attached) is about $230k where as a 1500sf house might run $255k. Both in decent neighborhoods. Bringing in about $1200/mo. SFR with no Hoa. Townhome is $65/mo.

If you’re ever in town let me know. I love to talk real estate. 

You have to spend at least $550k on your new property to defer all taxes. 

The depreciation will be almost nothing. 25% tax on 4% of the building value times 5 years. So 25% of 20% of the building’s share of the $140k original value. So less than $7k.

But the $400k capital gains is probably $80k in taxes? Plus any state taxes plus the 3.5% Obamacare tax may kick in. Could be another $40-$50k between them. 

So sell for $550k $20k in sales expenses? pay $140k in taxes and pay off $150k second. If that’s all you owe walk with about $240k to invest.  or 1031 with $530k-$150k or $380k to invest. 

Depends on what you can buy for $240k or $380k I guess.