All Forum Posts by: Kyle Kadish

@Anthony Blasko. 50k would be subject to depreciation recapture, 100k subject to capital gains.

When conducting a 1031 exchange, you carry the basis. You do not get to depreciate the full value of the replacement property, only any depreciable amount left from what was sold and the increased value from the replacement(s).

@Pete Kay As @Basit Siddiqi suggests, Opportunity Zones allow for this - gains are not forgiven, but deferred with the chance to reduce your gain depending on how long you hold the new investment. There are also requirements for additional capital to be invested.

You could find an Opporrunity Zone Fund, or buy a property yourself that is located in an IRS designated Opporrunity Zone.

@J Chouinard Property you sold for 100 had 50 mortgage on it. Currently held at intermediary is 45 (100 less transaction costs less mortgage balance). You want your replacement to be at least 95 (sale price less transaction costs) Easiest way is to finance the 50, but you could also use cash from outside of exchange.

@J Chouinard You are looking to deploy your net proceeds from the sale, not net profit. If you sell for 100, and after transaction costs (including the exchange), you are left with 95, you want to purchase propert(ies) equal or greater than 95.

@Roger East were there any entitlement changes to land use, i.e.zoning changes.

@Simon Collins, yes reverse exchanges are another option for investors conducting an exchange. The reverse concept is much more expensive, requires the use of a special entity, and maintains the 180-day timeline. Many individuals do not have the capital or borrowing power to maintain two properties at a time. Additionally, If you do not sell the property by day-180, you lose tax advantages.

@Joe Sz There are other options for real estate that qualifies for 'like-kind' in an exchange.

Many investors have found Delaware Statutory Trusts (DSTs) as a way to retire from being a landlord.

@Eric Smith Glad to hear it is a long-term tenant; too often tenants can be a cause of unneeded concern. Cash flow is nice to have, but not the same as NOI. The 690/month does not include property taxes, or reserves for any repairs that might occur.

I'll speculate on the property taxes, meaning you are generating less than 5% on your equity. If you pay 3,000/yr in taxes, your return on equity is less than 3.5%. There are better options to have your money work for you.

The real answer depends on your thoughts for the market....will prices continue to increase? Are there pending capital expenses? Will it sell better to an owner than investor? etc. No answer is the wrong one.

Good luck in the process.

Simply stated, @Amit M. One option for the retiring landlord is a 1031 exchange using a TIC or DST as the replacement propert(ies). Inventory is always available, and the investment amount is exact to the penny.

My clients have found them useful in transitioning to passive management while maintaining net worth and an income stream.