All Forum Posts by: Daniel Johnson

We are planning for something a little different this month! Instead of our typical brewery meetup, one of our regular attendees has a home that is about to come online and we are doing a meetup at the house. There will be some light refreshments, but BYOB if you would like! Come check out the newly renovated home and enjoy talking with other local investors! Held at 3710 Olympia Dr, Winston Salem, NC 27104 from 7pm to 9pm.

Quote from @Jeffrey Evans:

@Jonathan St.Leger thanks for the info.  @Erik EstradaI am asking for a friend.  Basically her mother is older and has owned the house for like 40 yrs in the bay area of cali so her profit will be much more then 250k.  Trying to brain storm to help reduce there tax burden while creating some income to help with the mothers care in the future (she has dementia).    Was thinking if they rent it out long enough they could sell it and 1031 it into a duplex or something that would lower the taxes and bring in some monthly income.  Better option could be to do a reverse mortgage and the kids can sell it after she passes away in the future.  As far I know this would minimize the taxes due to step up tax law.  Just brain storming 

Also, don’t have high hopes of this lowering her taxes. If she does a 1031 and starting earning rental income, her taxes will go up. In addition, she probably won’t have any basis to depreciate against, so the taxable income would be higher than if you bought the duplex with cash. 

To the original question, usually you need at least a year of rental to substantiate the change to an investment property. Best practice to have the property show up on at least one tax return. 

Because she would have lived in the home for 2 of the last 5 years, there is a possibility of executing a combined section 121 exclusion($250k tax free) + 1031 for the excess. You would need to work very closely with CPA and Qualified Intermediary to make sure no land mines are stepped on. That would potentially give them $250k of liquidity, while also deferring the gains and preserving the step-up in basis. 

They don’t need to make any rash choices. They need to speak with a professional that doesn’t have any “skin in the game” like a fiduciary advisor, CPA or attorney. Not anyone looking to sell a product.

Hey Patricia! We meet every last Thursday of the month. Same location and time as above!

We are having our monthly evening meetup at Fiddlin' Fish Brewing Company in Downtown Winston Salem on Thursday, 4/27/23. We will meet at 7 PM and have an open conversation about investing in real estate. If you are new to the group, we typically sit inside, in the back/middle. I will be there wearing a black and white "MACK" hat. Look forward to seeing you there!

Ouch, that hurts to read. You basically left $115k + of tax-free income on the table. Your standard deduction was $25,900 plus the negative AGI of $80k, means you could have “forced” $105k of ordinary income to your tax return(best is probably a Roth Conversion) with $0 of tax liability. Then you could have also had up to $83k of LT capital gains realized tax free inside of the 0% tax bracket for cap gains. 

I’m sure it felt good to get a refund, but definitely not the most tax efficient outcome. 

We are having our monthly evening meetup at Fiddlin' Fish Brewing Company in Downtown Winston Salem on Thursday, 3/30/23. We will meet at 7 PM and have an open conversation about investing in real estate. If you are new to the group, we typically sit inside, in the back/middle. I will be there wearing a black and white "MACK" hat. Look forward to seeing you there next week!

Quote from @Chris Smith:

Perfect! Thanks. Sayso on Brookstown or Green Street?

 Sayso moved their location over to Brookstown!

Quote from @Chris Smith:

Hi Daniel. Your group was just put on my radar. Are you still meeting in 2023? If so, what are your next meetings and is there somewhere I could follow, like a FB page or Meetup link?

 Hey @Chris Smith - yep! We are meeting twice a month. I post meetings here on BiggerPockets. We meet the last Thursday of every month, 7 pm at Fiddlin Fish. Also, we are meeting every 2nd Thursday at 6:30 am at Sayso Coffee. Look forward to having you join us sometime!

Already being done :)