All Forum Posts by: Jon Taylor

Your current cost basis should carry forward and continue on your REIT OP investment. Meaning, your depreciation schedule should continue.

Do you have an *option* or are you *forced* to participate in the REIT? Does the REIT pay its cash dividend out of operating cash flow (AFFO), or is it paying its dividend out of paid-in capital?

@Bill B. - This is a great point of view.

@Cameron Nordin

A cost segregation study accelerates depreciation by classifying certain building components as personal property or land improvements, allowing them to be depreciated over shorter recovery periods (e.g., 5, 7, or 15 years instead of 27.5 or 39 years).

By accelerating depreciation, cost segregation lowers your tax basis more quickly than standard straight-line depreciation. This means that when you sell the property, your adjusted tax basis is lower, which increases the capital gain you must recognize.

Additionally, any accelerated depreciation taken is subject to depreciation recapture at a higher tax rate (up to 25% for real estate assets) rather than being taxed as long-term capital gains.

So, while cost segregation provides significant upfront tax savings, it also increases your capital gains tax liability upon sale unless you use a 1031 exchange or other tax-deferral strategies.

You can find your current tax basis by reviewing your depreciation schedule (Form 4562) and prior years’ tax returns, specifically looking at your adjusted basis on Form 4797 (for sales of business property) or Schedule D (for capital gains and losses).

Your CPA should be consulted prior to making any decisions. 

The key requirement for a 1031 exchange is that the taxpaying entity must remain the same. If the LLC is a single-member LLC, it is considered a disregarded entity for tax purposes, meaning the taxpayer remains the same (under the same Social Security number) and there would be no reason to change title prior to the sale. Make sure to consult with your CPA before making any changes.

I've done a bunch of 1031's in VA. Happy to help. I'll DM you.

How did the unaccredited investor access the 506(b) syndication initially? Was it inherited?

If you own real estate in a self-directed qualified account, the 1031 exchange is unnecessary. There is not a taxable event to you on the sale.

Not good. 

Not surprised. 

Campus housing has been under tremendous headwinds for the last 4 years.

These properties were sold with extremely aggressively optimistic projections, as well as a price that represented a significant premium to fair market value.

So sorry to hear about your investment.

You can absolutely 1031 from the SFR into 3/4 of the MFR.

You need to replace the next value of what you’ve sold with new net investment real estate value. 

In the case of a multi-unit, the units you rent will be considered investment property 

*I am not a CPA, so trust but verify :)