All Forum Posts by: Dan Cox

Hi,
I have a rental home I purchased as a 1031 exchange. I am going to rent the house for two years...this is apparently a good amount of IRS “seasoning”.

I am then going to gift the home to my son and his wife. They will move into the home as their primary residence.

I understand I have to file gift tax papers. The amount is over the yearly gift allowance but I can deduct from the lifetime gift allowance.

I also understand my son would assume my basis in the property. At this time my tax accountant says the gain tax, should they sell after two years, is about 60K Fed/State.

Assuming not too much appreciation, if they decide to sell, in a couple years..they could buy another primary home and tax wise no issue as long as they bought equal or greater value...or if they sold and didn’t purchase, as of now, the 500K tax gain exclusion would cover any gain.

My question..when I gift to them, through quit claim, do they refinance the property, as owner occupied...the loan is paid off and they have the new loan in their name and I am off title.

What do they/I need to do to make this happen loan/title wise.

Thanks for the time. I hope this is clear as mud!

dan

Hi, I am fortunate to own my own home and two single family rentals. I am in the process of 1031 exchange on one of the rentals. I am on a fixed income. The lender says my DTI will be close attaining the new loan for the replacement rental I would like. The other rental has 250K equity. I would like to eventually cash out refi that rental and purchase one or two additional rentals. How can I utilize the equity for down payments if I will be up against the DTI ratio? I could try to find less expensive rentals but it seems I either have to use a significant amount of the cash out for down if o want a more expensive rental or find units where the rental income/expense will not increase DTI and thus allow the cash out refi/purchase. Thanks for suggestions..how to utilize equity when DTI is a factor. 800 credit, no credit card debt. Thanks for your time. dan

Hi, I have a single family rental home. It is almost ready to sell..rehab after tenant moved out.

I would like to purchase a new home as a rental in a new development using the 1031 exchange process.

I have done 1031 in past but the homes were already established.

The new homes are being built, models are open.

If I placed the net proceeds with an exchange company, and named the property..new home being built as the replacement..if the home was completed within the 180 days from naming, would that qualify as an approved 1031 exchange?

If so, can some of the net sales proceeds be held with the exchanger for improvements..backyard for example? Putting less down on new loan, reserving some for the improvement?

Does the 180 days start from the replacement naming? So in effect you could have 45 days plus the 180?

Can I draw on the current rental for sale Heloc, prior to sale and use for new home deposit? If so does those funds go through exchange intermediary as sales proceeds will.

Thanks for the help..making sense for me.

I appreciate your time.

dan

Sent from my iPhone

Accountants that is.

Hi Dave..sorry to trouble you again...how can I contact some of the accounts on this site you mentioned that might be able to answer the tax question above in our emailing s.  Thanks Dave. dan

Thanks Dave..how would I contact some of the accountants on site you mentioned..for the tax question. Once again I appreciate your valued help/time. dan

Hi again Dave...If I can exchange and son moves in and pays reasonable rent..close to going rents...and lives in for two years, can I gift to him without tax consequence for me? How about for him?

If he is in the home, paying rent and wants to move elsewhere..options? do another exchange if couldn’t gift...or if does move and I could gift to him, is he responsible for the past and present gain?

Thanks for explaining the rules/options as you have opportunity Dave..and Dan if you like.

I appreciate all help.

dan

Thanks so much. Dave again and Dan. Your thoughts/inputs are greatly appreciated. dan

Hi Dave..I attained the equity line. The bank paid off the 6K HVAC note.

The issue now. I have two rentals. The basic plan when I go..one for each son.

I want to help oldest son now attain a home.

He hopes to live in certain areas.

Once current tenant is out..then I have to decide what best to do..to accomplish the goal.

Choices..

sell as is..at least entertain offers..maybe state subject to 1031.

use equity line, repair/upgrade..only to extent minimally recoup costs..sell..again subject to 1031.

if exchange cannot be worked out..can’t find/close on property in areas wanted...re rent attaining top dollar..increase rent attained could pay for equity line....currently about 300 under...and wait until sons situation/needs change.

do as above but after re renting attain a cash out refi, put money into an account and give/gift to son when finds a home..he does have some monies to use...would be first time home buyer.

last and really wouldn’t want to do...sell as is and or upgrade to extent would recoup and sell..pay the gains....my cpa says capital gain would be about 30K.

I owe 78K..value as is about 260..with 25K improvements, value perhaps 300..310K.

What would you do..what would be best/better choice.

It will be easy to sell, attaining a home for exchange, based on demand, in a desired area, may be the issue..the 45/180 day rules.

Thanks again for your help/time Dave.

dan

Great advice Dave..so glad I found you. dan