All Forum Posts by: James Kim

 Who installed it? if its brand new then there should be some sort of refund or repair by the installer. As mentioned above it would have been necessary to put them in a hotel for a few days. And even now it would make sense, I would assume your state requires you provide hot water.

I cant give advice in regards to your situation and a credit to the tenant. Every situation is different. From my experience, im a little more relaxed and have provided credit for that one minor incident that prevented the place from having water damage. I would do everything I could to get the water heater up and running within a day or two, which would prevent this type of situation where a credit is even considered.

Hi guys,

My 1031 exchange may fall aprat.

I am trying to figure out how much would I pay in taxes on a property that I sold?

I sold it back in May for 120K, I bought it for 25K back in 2009

I am in a 30% tax bracket

Am I calculating it approximately correctly?

120K

- 6k realtors commission

- 25k purcase price

89K is the profit (lets say 90K for simplicity)

So 30% of 90K is about 30K

Does it mean that I will have to pay to the IRS about 30K in taxes?

@James Kim- only thing  you need to do is get your insurance  revised to a rental policy ...when did you close on the  orig 2nd home loan ?

@James Kim

People finance second homes intending on using for STR all the time. The guidelines require that you stay at your second home for at least 14 days of each year... If truly a second home loan when financed, the note, as @Chris Mason pointed out, will show your intent at signing.  Converting it to an LTR is interesting though.  If the lease was for 11 months instead of 12, you may still be able to adhere to the terms of your note, provided you visited for the minimum time.  It would not be fraud if you adhere to the terms of the note.  

Converting to a full on 12 months LTR, would require refinancing to a proper investment loan.  I am not a lawyer, but ethically, it should be refinanced.  On the plus side, if you have equity in it, you could pull cash out and roll the funds into another investment.  Two birds, one stone.

Cheers!

If your intent when you took out that mortgage was to do with that property what you said your intent was for the 12 months that followed when you signed that paperwork, you're fine. Please reference paragraph 6 of the deed of trust you signed. 

If your intent was otherwise at the time you signed that paperwork, then you committed mortgage fraud and could go to prison. 

If you upheld your end of that deal, the lender cannot call the note due. 

It would not hypothetically be me (or anyone else here) that you have to justify your "intent" to as being true, it would be a judge appointed by someone elected by the voters, so there's no point in engaging in a series of "but what about if..." with me (or other posters), since I'm not (and I assume this is true of most others, as well) a judge. :)

"If i don't refinance that loan or anything to cause the lender to know the property is a long term rental, would it not matter?"

Assuming you believe in the value of insurance, that's not actually an option, rendering the question moot. Your insurance carrier will notify the lender when you switch up your insurance type/coverage/etc.

this is their 3rd year tenancy, so I think they know how to operate the thermostat, interestingly, it does not happen during day time when its 95 degrees outside.