All Forum Posts by: Daniel Dietz

@George Blower, if it is allowed could you post a link to your EXCELLENT Youtube live you had a week or two ago on this topic? I think it would help a LOT of people understand this topic.

Also, in regards to the above comment of 'like kind to like kind' as far as the 'repayment' goes....I assume that would also apply to ROTH 401K to ROTH IRA would meet that standard?

Then I also assume that it would NOT apply to taking it FROM a ROTH IRA and doing the 'repayment' to a ROTH SOLO401K? I am think that because I know that unfortunately you are not allowed to 'roll over' a ROTH IRA to a ROTH SOLO401K :-(. Who ever came up with that rule and what is the point! ;-)

Thanks, Dan Dietz

For buy-n-holds we are seeing 4.75%, 25 year amortization, 20% down with a 10 year lock. After the 10 years, it can move a max of 1% per year and is maxed out at a 6% increase over that entire 25 year terms. 1% total closing cost other than the appraisal fee. Our lender is only in WI.

Dan Dietz

My first one was for a flip. I am a contractor and a flipper that I do work for ended up with 'too many at once' - he had 2 for sale, working on two, and picked up 2 more in one day at an auction, so wanted to wholesale one to someone else to flip.

He bought for 75K, sold to me for 85K, and as is value was about 130-140K. The terms were $0 down (I had to bring all of the fix up money) 6% interest only payment monthly with a balloon for the 75K in one year. He borrowed HIS money from family who were retired farmers and glad to loan to him at 3% (3 times CDs at the time) so he also made a 3% spread loaning to me @ 6%. It was a win-win-win situation. I also borrowed the fix up money to preserve my cash for other deals. I did that 50K @ 5% from a family member that took at second position lien. That was a balloon and interest accrued at 1 year.

The deal I am working on now is actually using my ROTH SOLO401K. Usually you need a 40-50% down non-recourse loan for a self directed account. This is a landlord I know (we are both contractors) who wants to start selling off a few, and only using seller financing, but someone he knows so he is assured that it will be taken care of in case he would ever need to take it back. He is looking for 1) to spread out taxes 2) avoid realtor fees (things are selling easy and FAST in our town) 3) To have a 'low risk' (compared to stock etc...) income stream in retirement.

We are still working on details but probably something around 4.5 - 5% rate, 15% down to cover 1st year capital gains & recapture taxes, and a 30 year term, most likley with a balloon at 15 years, that could be renewed/renegotiated depending on both of our circumstances at the time.

I missed out on one by about a day similar to the one mentioned above. That owner sold 5 duplexs for about 1M with 20% down, 5%, 30 year amortization. There WAS a prepayment penalty for the first 3 years, and a balloon at 7 years, that they could also renegotiate if desired by both parties.

@Ashish Acharya when you talk about 'piling' capital gains 'on top of' our other income, does it work like this;

I make 35,000K W-2 or K-1 taxable income, so right near the top of 12% bracket (single).

I now have 100K of capital gain from the sale of a house, so total income 135K.

Does that mean my 35K gets 'counted first' and stays at the 12% federal rate? And THEN 5K of the capital gains is at 0% (up to the 40K threshold for 0% rate, and THEN the other 95K is taxed at the 15% capital gains rate?

And I assume that any withdrawls from a ROTH would not affect either of those rates?

Thanks for all you help with here on BP!

Dan Dietz

One way not mentioned yet is to do 'yearly gifting'. You, and your spouse if married, can give ANY one 15K per year completely tax free.

That 15K, to my understanding, can also be shares of an LLC. So imagine if you have 3 kids and a spouse, that is 90K per year. You can also have the LLC set up so that they can or can't have voting rights, yearly payouts etc.... This could have some power over 10 -30 years.

Dan Dietz

What *might* help is what I have seen commented on here in the past. 

If you pay your parents 'rent' (even if they are not asking for it) of up to $2500 per month, they can 'gift back to you' up to 15K apiece (30K total) with no tax consequence to you or them.

That might be one way to get around not having your own 'living expense'.

Dan Dietz

I have not heard of 'ppoint' either, but one deal that I passed on of 10 units when he did sell it to someone else there WAS a clause that he had to pay the equivalent of 5 years of interst even if he refinanced in a year or so. Part of the reason this seller wanted to do seller finance was to turn 1M in equity into a nice, safe income stream that was better than CDs and lees risky that stocks.

Dan Dietz

@Bill Exeter thanks for your great explanation as usual :-)

I wondered if you, or others, could chime in on how 'depreciation recapture' is taxed in a 'seller carry'? I have read conflicting things - both that ALL of that is due at time of sale (or at least on that years taxes), and others say it is spread out proportionally like the capital gains tax as the note is paid off over the years.

The reason I ask is that I have heard quite a few times where sellers 'were surprised by the taxes due that first year', and in some cases they did not get enough down payment to even cover that.

Thanks, Dan Dietz

Here is another thread talking about the potential benefits of CSS. https://www.biggerpockets.com/...

Dan Dietz

I think the 'timing benefit' complete depends on what your other circumstances are too. And I am pretty sure the "software based" ones are around 1K or less.

What it you have a large passive gain for a year that you want to offset?

Or in some cases like mine, I can take up to a 25K passive loss on this years taxes, so i can convert 25K over to a ROTH from my Traditional IRA and essentially 'offset' that tax bill due.

Also, if you are planning on 'trading up' over the years in properties you could 1031 each time you run out of depreciation on your existing property and keep repeating until you die and you would be way far ahead, potentially.

I understand what you are saying about it being 'just timing' - it also just depends on 'how' you would use that benefit it seems.

Dan Dietz