All Forum Posts by: Account Closed

@Dave Foster ; Thanks, I understand that they could shelter a portion of the profit in a 1031 exchange, however, it looks like the appraisal from April 2011 will be very close to our contracted price.  This all depends on how the appraisal accounts for the previous condition of the property, because when looking at the market value of sales in the area it will be within $10-25k of our price.  However, since their inheritance date the copper was stolen, significant damage was done and renters trashed the place.

Again, this is just for my curiosity and I'm not giving legal or tax advice to the seller, while they have their own professional representation. That being said, I see that they have the following options;

• A: Swag an appraisal for April 2011 and pay taxes on less than $25k of profit
• B: 1031X/defer a significant amount of taxable profit to property 2 while paying taxes on the difference between property 1 & 2, estimated to be over $100k.

@Brandon Hall ; Thanks for your advice and concern, I'm only trying to point my client in the right direction to find some guidance on the issue.  I have reiterated that I am not her lawyer or CPA, and she will be seeking her own professional guidance. 

@Dave Foster, @Wayne Brooks, @John P. : There was no appraisal ever done for the estate, my client was granted everything through the parents will.  We are in escrow now for this property (1) and another property (2) she is buying with the cash from 1.  The escrow agent suggested adding the appraisal to the sale to submit with my client's 593-C "Real Estate Withholding Certificate".  Does this sound like the legit path for my client, I only want the best for them?   

More Info: Issue with the 1031X, The 2nd property is in escrow for 100K less than the 1st.  

Thanks Joel, 

Their property was used as an rental/investment. How do they retroactively determine the stepped-up basis at the time of inheritance?  Is there a tool or standard procedure for accomplishing this?

I have a client in California who wants to sell their house to me and keeps mentioning a 1031 exchange, however, she inherited the property in April 2011.  

This house is in bad condition and I'm buying it as a flip, how do I determine her stepped-up basis at the time of inheritance? Will my client use the property's ARV at the time of inheritance as the stepped up basis? If so they may not be subject to capital gains taxes and there will be no need for a 1031 exchange, atleast this is my hope.

@Jen Hoang, I haven't bought from a turnkey company yet so I can't offer great advice.  However, the closest I have come to buying in was with Alex Craig with Memphis turnkey, he is also on bigger pockets and I met with him here in San Diego, and he has been very responsive ever since.

@Jen Hoang, have you checked out turnkey-reviews.com? Brie and Jay are bigger pockets regulars and I've listened to all their podcasts and spent many hours on their site.

***Note, I have not been paid in any way by them, just a genuine reference

@Chris SaintsDo you have a lot under contact or scoped out for a build?  The money is in the dirt, you get a good deal on the right lot and you will have plenty of funding options.   

@Chris Saints, I’m originally from NY and spec building in CA now, couldn’t agree more on the rewards of spec builds versus flips. PM me some more details and I’ll help out any way I can.

@Troy Gravett, this is a very intriguing concept. Essentially this would be a long term note/loan that I could transfer to any property under my LLC. Would this note have to be transferred to a property owned free and clear or could it be used on equity as a secondary note?

@Michael C Gregory, I'm not sure if a seller financed deal would work for her since I plan on selling the spec home in less than six months after I purchase.  This will pay off her note and then she will have to pay the capital gains anyways.