All Forum Posts by: Justin Summers

 Take this guy up on this offer.. This is like your golden ticket!

Just so many questions and variables.. most of which have been addressed. I'll Add.

1. The appraisal is not the value. It's someone's opinion of value and it's usually wrong.. I can be higher or lower than the actual value. The value is what a buyer will pay on the open market. 

2. $20,000 off a million is different than $20k off a $100,000 purchase price. You should think in percentages not dollars.

3. You don't know the market pricing. That is a huge problem.. Most likely the realtor you a trusting is working for the best interest of the seller not your best interest. 

Honestly, and I rarely say this.. You don't know enough to be buying this property. You probably should find a realtor that knows the market inside and out and pay them to give you advice. Don't have to be a full commision just get professional advice.
  

So what did you do?

You basically have 2 options. 

1. postpone the foreclosure sale

2. Find someone that will loan you the money or partner with you on it that is non traditional like an investor that buys directly at foreclosure auctions in the area.  (I do this just not in your area) 

3. Buy subject to existing mortgage. Basically catch up all the back payments the seller owes to stop the sale and make their payment until you refi. 

The main issue is that you don't have time to do the title work so you would need someone comfortable with reviewing the title themselves and putting up the money without getting a lenders title policy. This is risky so you would be paying much more for that risk.  Your best bet is to get with the sellers and draw up a contract with a quick but realistic closing date.. Like 20 days. Get an approval letter from a hard money lender or a bank and post a non refundable deposit that in the event the deal doesn't go through the money is forfeited to the foreclosing lender. Get all this together and have the seller submit and emergency motion to the court to postpone the sale for 30 days.  In most jurisdictions that are primarily democrat elected judges they will extend the sale date so long as no prior extensions have been granted.

My father and I bought a Vacation home in Florida 7 years ago for $500k and purchased it in an LLC .. The only purpose and use for this LLC was to purchase the property.. No other business or properties owned by the LLC. We have mostly used this as a vacation home but I have been living in the house full time for the last 2 years. My father passed away last year and I would like to move into the property and have it as my homestead. To have it as a homestead it can not be in an LLC. So, I was going to transfer it to a living trust with myself as the beneficiary and trustee. House is now worth about $1,500,000.

These are my questions. 

1. I'm assuming since both my father and I owned the house there would be a stepped up basis to 1/2 of the value of the house upon his death or roughly $750k..  Correct? 

2. To qualify for a homestead exemption on the house I would have to transfer it from the LLC to my trust.. Would IRS then consider this a "sale" and I would have to pay capital gains on it?

3. I can't really afford to pay capital gains on 1/2 the value when I'm not really selling the property and getting any funds.. If I just keep the property in the LLC since the other member is dead does the LLC now become a single member LLC?

Or could I just transfer the property from the LLC to my trust for 1/2 the value ($750k) and owe no capital gains?

My Mother passed this year and had all her real estate (8 rental properties netting about $100k per year)  in a revocable trust I'm the trustee of the trust now. 

It's my understanding that the trust has automatically become an irrevocable trust upon her death and my plan is to obtain an EIN for the trust. 

My self and 2 siblings are the beneficiaries of the trust.  

My questions.

1. Will the trust take all the expenses and depreciation deductions of the rental properties on it's tax return and then just distribute net income to the beneficiaries having them pay taxes on the net income on their K1? or are the deductions taken on each beneficiaries tax return? 

I have been distributing monthly payments to each beneficiary just under what I anticipate will be the net income and then plan to distribute any left over profits in December of each year to the beneficiaries 

If there are different ways to do this I'd like to hear pros and cons.  

Thanks for any input

 Thanks.. This is exactly what I understood the rules to be as well.

I bought several properties at tax sale in 2022 and I'm doing my taxes now. The properties are unlivable and have not been rented and are not offered for rent. They are just sitting.  I do have costs incurred maintaining them as well as property taxes paid.  My questions are :

1. Since they are not rented I don't start depreciating them until I do rent them or have them ready to rent. Correct? 

2. Do I deduct expenses on them yearly ? If so where? Since they aren't on a schedule E yet. Or do I just wait until I either sell them or renovate them place them as a rental? 

3. If I don't deduct any expenses yearly do I even need to address them on my tax return? 

4. If I do convert the property to a rental or sell it in the future can I then deduct Prior years expenses I had paid? Like If I sell it in 3 years from now and never had it rented can I deduct the past 4 years taxes I paid while it was sitting vacant? (or add it to my basis)

Thanks

Any jersey experts chime in on this?  Does the overage of the sheriff sale of the 2nd mortgage go to pay off the 1st? or back to the owner?  I'm not sure..

Not 100% sure but most of the time the bid would go to payoff the 2nd mortgage that is foreclosing and all their fees. Then any left over goes into an an escrow with the court and the 1st mortgage would have to apply to the sheriff to release it to them and then if anything is left over from that after the first is paid any other liens would be paid (If they applied for the overage) 

So, a Bid on the 2nd today of $36k and having to pay off the first mortgage of $43k would be pretty much the same as bidding $79k at the auction today. You would have to follow up with the first and have them file a claim on the proceeds after the sale.