All Forum Posts by: Maggie Hamill

We're looking to sell our rental property that isn't performing well. We purchased the vacant land on 1/29/23 and built the duplex that spring/summer. It went up for rent in November 2023. 

The question is, what date is used to qualify the year of holding to avoid short term capital gains tax?

We are a developer near Madison, WI.  We have conventional financing on our duplexes and looking to hold a few and unload a few. A new lender that we met with told us that if a bank somehow ties the mortgages together (don't remember the term he used), the bank can use the funds from the sale of one to pay down the mortgage on the other property. 

At first we thought of this as a bad idea because we wanted our proceeds from any sale to 1031. However, now we're looking at this as a potential strategy. Build two duplexes and hold one, sell the other. Proceeds from the sale pay down some of the mortgage on the first to cash flow better. Our question is can this be done tax-free? We will obviously consult our CPA but wanted to know if anyone has heard of this strategy. This would be different from a 1031 because we wouldn't be buying new or exchanging. Thanks in advance!

We are builders and developers in the Dane County (Madison, WI) area. We currently have one duplex completed that is rented and cash flowing approx $1,000/mo. However, we have another that is negative cash flowing $500/mo and three more that are under construction and expected to have negative cash flow as well with rates around 8.5% as they are right now for commercial. We would break even on these if we refinance around 6.5%. We manage the properties ourselves.

Looking for advice on best strategy moving forward. Do we sell the negative cash flowing duplexes (they are zero lot line and expected to bring in approx. $400k per unit) or hold? We will owe approx. $580k once completed so we have some decent equity. We've looked at some multifamily fixer uppers in Rock Co. and some turn-key STR's in FL. Just not sure what direction to go next for most bang for our buck.

@Wesley Smith I realize this post is quite old. Perhaps your method has changed now.

When you were performing most of the construction on your rental projects, how were you paying yourself? 

My partner is a licensed general contractor/carpenter and works FT at a commercial construction company. 

We are in the process of building 3 duplexes.  First duplex we've subbed most trades and my partner is acting as GC.  We're considering that he leave his W2 job in order to build the next two rentals for us -- covering the framing and siding labor alone is approx $100,000 for the next two projects so we'd essentially pay him for these things instead of paying a sub.  Loan remains the same and he gets to do what he loves vs work for someone else.  Obviously this is a temporary plan as we figure out our next moves (looking to roll equity into new, larger projects as soon as possible).  Anyone else done something similar? Thoughts/suggestions?  TIA!