All Forum Posts by: Daniel Dietz

@Brian Eastman if I am understanding you correctly, the yearly income is taxed at 'Trust Rates', but the capital gains is not at Trust Rates but the standard Capital Gains rates the same as it would be outside of a Self Directed account?

Which category does the 'depreciation recapture' portion fall under then? Mean if you have 50K of income, 25K of depreciation taken and 25K of capital gains?

Thanks, Dan Dietz

@Dan Cox if I am following your conversation with the ever-so-helpful Dave Foster, it sounds like you think it will be harder to find the replacement than sell your existing.

In that case, why not just wait until you DO find that replacement make an offer with maybe a little bit of an extended closing option, and THEN put yours up for sale?

Dan Dietz

We have not done one, but our portfolio (commercial lender) lender says

we would be allowed to in light of our existing history with them (this is key). Also,

the DSCR would have to stay better than 1.2 on BOTH loans combined.

I have yet to find a deal that meets that DSCR rule, but if I do you can be I will be trying that :-)

Dan Dietz

@Gebson Pinheiro I see you are new here, so welcome to BP.

I and my partners all have SDIRAs and SOLO401Ks also. We use the Professionals we have found here on BP such as those who took the time to comment above and have been very happy with the service.

Our original provider said we could do a similar but different 'grey area' transaction so we did since we were new to SDIRAs. It became a pain in the *** to stay in compliance. We even consulted one of the top Self Directed Attorneys in the country, and eventually decided there are better ways and divested from that particular property. We own 9 properties this way in 2 different LLCs, one for SDIRAs and one for SOLO401Ks with 6 different accounts involved. To me, there are enough rules to follow that tip toeing into grey areas is not worth the stress, to me at least.

Where the grey are where you are concerned comes in because your wife is disqualified to you, and her child is disqualified to her. Do two negatives make a positive? I would bet money that there is likely no IRS guidance on that. I personally would not want to be the test case.

I would think there could be a bunch of grey area also in assigning a value to you selling/gifting it to them, and then them selling/gifting it to you also.

What is the main goal in going this route? Would there be a reason not to simply look for another property to buy with your SDIRA?

IF you are really set on this, I would consult a good attorney in this area such as KKOS Lawyers / Mark Kohler's Office, or I think here on BP  I believe @George Blower is in this space and possibly a couple of others.

Dan Dietz

We have not done one, but our portfolio (commercial lender) lender says we would be allowed to in light of our existing history with them. Also, the DSCR would have to stay better than 1.2 on BOTH loans combined.

I have yet to find a deal that meets that DSCR rule, but if I do you can be I will be trying that :-)

Dan Dietz

There have been several Podcasts on here about that if you browse through them. I think maybe @Shiloh Lundahl was one that gets into the details.

@Natalie Kolodij, good explanation. Does the 'recapture tax' (not sure of the technical term) due on the depreciation a person taxes always come due in the year of sale, whether they do an outright sale or an installment sale?

I am actually asking as I am working on BUYING a seller financed deal and his small town non-real estate tam man is telling him it is NOT all due in year one, and that it can be spread out. I have always understood, but never done one myself, otherwise - meaning due in year of sale.

I know it would be his issue, but we are talking about almost 400K of depreciation over the years and he is a friend so I dont want him to be shocked :-)

Thanks, Dan Dietz

Depending on *how* conservative you want to go you could partner with others for rental properties.

The way we do it the Private Money Investor brings all the down payment which can be cash or retirement funds, which is at least 20% but could be more, and we find, fix if needed and run the rentals do all PM & business management. We each get a 9-12% long term return. The current cash on cash is low, but we are doing these with at least a 10 year hold in mind.

Through the last down turn our rents actually went up, and property values only dipped less than 10% and are now back up quite a bit above where they were before the dip.

So they get a hands off steady investment that diversifies their portfolio. 

@Steven Hamilton II if I understand you correctly, I think you are saying that the debt a person takes on is also counts towards basis in a property?

In the original posters situation they would NOT have a capital gain, but the deduct-ability of the interest on that 'excess portion' (the cash back) would depend on what it was used for, meaning reinvested vs a personal owners draw as income?

Thanks, Dan Dietz

@Justin Lee they do not, just Wisconsin. It took a while to find them, but it seems like a lot of what I read on here is 'the smaller and more local the better'.... one that works with you and your situation instead of just some formula from the bosses off in some far away land :-)