All Forum Posts by: Gregory Wilson

Much of real estate is local. A strategist in say Denver or Philly would not be a very good choice for a person in SF CA. Real estate strategy at the individual investor level is important but uncomplicated.  There are maybe 10 things that matter and one could learn those in a couple of years on the job. There will be several hundred people in SF that would do just fine for you. Best of luck!

Quote from @Basit Siddiqi:

As others have mentioned, you should be eligible for 121 exclusion which will be $500,000.
I would factor in the renovations of $400,000 that you spent.

If you move back to NZ and then sell the home, you may want to see if that would exclude you from paying NYC taxes since you will not be considered a NYC resident at that time.

Best of luck

NY is pretty good at capturing income. If the property is in NY, if it was earned in NY all or part, if the owner is domiciled in NY. They cast a wide net.

AI says:

In Georgia, property tax assessment appeals follow a structured process with multiple levels of review:

Initial Appeal to County Board of Assessors

You must first appeal to your county's Board of Assessors within 45 days of receiving your assessment notice. This involves:

• Filing a written appeal form (available from your county assessor's office)
• Providing evidence supporting your claim that the assessment is incorrect
• Common evidence includes recent comparable sales, property condition issues, or errors in property characteristics

County Board of Equalization

If unsatisfied with the assessor's decision, you can appeal to the County Board of Equalization within 30 days.
This board consists of local citizens who review appeals and can adjust
assessments. You'll typically get a hearing where you can present your
case.

Superior Court Appeal

The final level is appealing to Superior Court within 30 days
of the Board of Equalization's decision. This requires filing a formal
lawsuit and is more expensive, often requiring legal representation.

Key Points

Timing is critical
- missing deadlines means losing your right to appeal for that tax
year. Each county may have slightly different procedures, so contact
your specific county assessor's office for their forms and exact
requirements.

Evidence matters
- successful appeals typically rely on recent comparable sales data,
professional appraisals, or clear errors in the property record (wrong
square footage, incorrect property characteristics, etc.).

The process is designed to be
accessible to property owners, with the first two levels not requiring
attorneys, though complex cases may benefit from professional help

Quote from @Dylan Brown:

Hey Rene – congrats on the appreciation, and good call looking into this now. You’re staring down a big gain, and honestly, getting your basis right is the single most important thing you can do to reduce your tax bill here.

There’s a lot of noise in these threads sometimes, and I just want to offer some clarity as a CPA who works with real estate full-time. Some folks love to act like you need a receipt for every screw, and that if you can’t show perfect records, you’re doomed. That’s not how this actually works.

Yes – the IRS does expect taxpayers to maintain records “sufficient to establish” their numbers (Treas. Reg. §1.6001-1), but they also know people lose things and do renovations over years. Courts have consistently allowed credible estimates based on reasonable reconstruction – that’s straight from Cohan v. Commissioner, a foundational tax case. So if you spent $400k on renovations, you don’t need $400k of receipts – but you do need a solid narrative to back it up.

That said, no reasonable CPA is going to claim a $400k improvement basis with zero documentation. You’ll need to put together a support file – card or bank statements showing purchases, categorized spreadsheets tying out to projects, photos, permits, emails, inspection reports – anything that helps tell the story. Self-performed labor isn’t basis, but the materials you bought for it are.

A good CPA is allowed to rely on your info as long as it’s not clearly wrong or incomplete (Treas. Reg. §1.6694-1(e) and Circular 230). If someone tells you otherwise, they might just not understand their actual responsibilities. We have to take this work seriously, but that doesn’t mean freaking out and turning clients away because they can’t produce a shoebox of receipts.

If you’re willing to put in a little time now to reconstruct the expenses and organize it clearly, you’ll likely be able to support the full basis or something very close to it – and that could mean six figures in tax savings.

Happy to help if you need guidance on how to structure the support file or talk it through with a CPA. You’ve got a great opportunity here – just don’t leave money on the table because someone misunderstood the rules.

 Renee', from this quote: 

" . .  .That said, no reasonable CPA is going to claim a $400k improvement basis with zero documentation. You’ll need to put together a support file – card or bank statements showing purchases, categorized spreadsheets tying out to projects, photos, permits, emails, inspection reports – anything that helps tell the story. Self-performed labor isn’t basis, but the materials you bought for it are.

A good CPA is allowed to rely on your info as long as it’s not clearly wrong or incomplete (Treas. Reg. §1.6694-1(e) and Circular 230). If someone tells you otherwise, they might just not understand their actual responsibilities. We have to take this work seriously, but that doesn’t mean freaking out and turning clients away because they can’t produce a shoebox of receipts. . . . "

Dylan's accurate assessment highlights the sad state of tax preparation in the U.S. While he is correct, his conclusion reiterates that there are barriers to your basis increase/gain reduction. The barrier is your CPA to whom you will have to prove at least that you are not "clearly wrong" or "incomplete" and who says says that zero documentation will not get you a tax return with the basis additions you describe.  Even if you actually made them. This a requirement that goes beyond the Treasury Reg on basis, because you could come into an audit or even the US Tax Court and with a straight face and testify under oath that e.g. in 2012 you built a greenhouse on the south side of the house and bought materials at Home Depot and Lowes and recall spending about $30,000, and on and on. And no one would object. You might not win but you would have your day in court. But your tax preparer says no. Not because you are not allowed to do what I just described and not because you did not incur the cost of the capital improvement but because he, the preparer, is worried about his risks under Circular 230. 

All I can say is people should learn to use Turbo Tax and self prepare their returns.

Other can give you strategies.

But:

You are entitled to the full $400,000 of improvements in establishing the basis. Not just the ones you have receipts for. However, your cowardly tax preparer may decline to prepare the return without you saying you have receipts. This is the sad legacy of IRS co-opting the paid preparers to be their secret agents under Circular 230. 

When the preparer refuses, which they probably will, make them show you the Treasury Regulation that requires receipts. Leave plenty of time to fire the preparer and shop for one who is on your side.

PS: The likelihood of this issue for this year being audited by IRS is about the same as you being killed at the 116th and Lexington Station  or having your house hit by lightning.

Cindy, if you got a quit claim deed in 2006, unless the quit claim deed explicitly reserved a life estate for the joint lives of your parent, which I seriously doubt, you got ownership in 2006 for IRS purposes. It doesn't matter that you did not get possession or the parents paid taxes and bills. None of that matters. Its in the Treasury Regulations which I will not bore you with. But when you get legal counsel bring him a copy of the deed and he will confirm this.

Brokers get paid from the carriers. So find an independent broker and task him with finding you the most cost effective carrier.

But, remember always (as so many forget) that even though he is independent, he is the carrier's agent not your agent and his duties are to the carrier and not to you. Independent only means that he is not bound to be the agent for one carrier like Snake Farm or Allsnake. He can shop multiple carriers but he is still their agent when he is selling you the coverage. There are insurance consultants that will an agency relationship with you and many landlords with 100 or more doors will hire one. But, they are not cheap.

Just to be clear. If the 2006 deed was a conveyance to you YOU DON'T GET A STEPPED UP BASIS, despite the misinformation that has been posted here. 

And, just for your future reference. a "quick claim deed" (there is no such thing) is actually a "quit claim deed" and what that means is that the conveyance was made to you without any warranties of title. Your parents just conveyed whatever title they had. This is typical in an intervivos conveyance everywhere because one does not want to waste the money on a title exam when gifting to a child and also having to recite all of the liens and mortgages that might still be on the property. And, a general warranty deed  as opposed to a quit claim deed requires that all of the liens and mortgages be excluded in the granting clause or the deed will be in breach immediately. Because a general warranty deed conveys the property free and clear unless so stated. 

All of this is fFurther indication that there was a gift in 2006 and that YOU DO NOT GET A STEPPED UP BASIS.

Quote from @Ned Carey:

@Cyndi Lees

          "I received the property through a guarantee deed (quick claim) that my parents filed in 2006."

What do you mean by that? if they deeded it to you in 2006./ She  didn't own it when she died, you did.  So no inheritance tax. 

If your mother did own the property when she died, then an estate has to be opened to transfer the property to you. At size of estate there is no federal inheritance tax. There may be state inheritance tax. 

Presuming the deed is not in your name already you are going to need legal help. Sadly that will cost money. But given the value of the property you should be able to afford an attorney. 

^^ This is the correct answer. A guaranty deed is just a warranty deed of the type used in AZ. It is not a life estate or a transfer on death deed unless it specifically says so. So Ned is right that you have been the owner since 2006 according to your facts. Unfortunately that means that you did not get a "stepped up basis" upon your parents death even though there might not have been any inheritance tax to pay. 

Every time someone asks me to calculate whether a rental,  or a sale, payment of tax and reinvestment of the net, is best it always seems that the rental is the way to go. 

You need to direct the many issues raised in this fact pattern to your attorney and advisors. Having said that, be advised that a contribution of assets to the capital of an LLC is not a taxable event unless the LLC assumes liabilities for which the members are no longer responsible for. It is a 721 contribution.