All Forum Posts by: Account Closed

Folks, hoping someone can clarify a few things about deferred gains for me. I'm in a 1031 as of a few days ago and I'm trying to figure out how much capital gains I would be liable for if I decided not to actually execute the 1031. I'd normally discuss this with my accountant but for reasons I don't quite understand, he seems to have gone A-wall. I'm still hoping he'll make contact but in the meantime if someone can help me with some things I'm confused about that would allow me to think more clearly. I'll use rough numbers to describe my situation. I'm just trying to get a ballpark idea of the numbers. Here goes....

Jan 2007, sold property (A), 360k went into 1031 (A)

Jan 2007, bought property (B) for 675k using the 1031 360k and a mortage for the remainder

Jan 2007, rented out property (B)

June 2019, renters moved out

While it was rented (2007 - 2019), it was depreciated yearly as standard

April 2020, sold property (B) for 1.4M. Sale costs = 200k, mortage payoff = 200k i.e. 1M went into 1031 (B) (where it is now)

I will have no personal income myself in 2020 tax year

MAJOR question is this:

When it comes to calculating the gain, regardless of the gain amount

a) Because of zero income in the tax year of the sale, do I qualify for 0% capital gain tax rate for the federal portion?

In other words, I know I have to pay 13.3% for the California portion of the gain, but can I escape the federal part?

Thanks

@Dave Foster many thanks. I think I get what you are saying but I'll need some time to digest properly. I may be back with some more questions. Thanks again.

Hi. Just joined. Here's my situation (using rough numbers)

Bought house in 2007 as part of a 1031

Lived in house for 3 years

Rented house in 2010

Want to sell, tenants want to buy

House worth 1.5M, I owe 200k, tenants can afford 1.2M

I want to sell and somehow not exit the 1031. I've read up on MIS, CRT, NNN, owner finance.... I'm not sure yet what way I'll go

But my question is, is there any way for me to somehow "sell" the property to my tenants who can only afford 1.2M? If I could apply (1M = 1.2M - 200k) to my next venture and not lose the 1031, that could work for me. But what happens to the other 300k? I could also be interested in somehow selling them 80% (1.2M/1.5M) and somehow hanging on to 20% (300k/1.5M) as a long term investment.

Bottom line is I am trying to find a solution whereby

1. tenants pay 1.2M get to stay there long term

2. I get a min of 1M to invest elsewhere and not pay capital gains

3. somehow the 300k remainder also doesn't trigger capital gain

I hope that makes sense! I'd welcome any creative ideas....

Thanks.