All Forum Posts by: Michael Batshon

@Michael Batshon a single family home or a MFH? If single family, you can put down as little as 15% with a Fannie/Freddie loan. 

@Michael Batshon

If you bought rental property in say, Las Vegas, and live in Southern California, there is a good chance you will have a negative amount on your schedule E (rents/royalties). The main drivers of deduction will come from interest if loan, depreciation, mileage, repairs, maintenance, hoa, taxes, and insurance. You should be at net loss around 2-3k. You will have depreciation recapture when you sell, but that's down the road.

Terry

I am a Californian, I can tell you we are all stuck with paying California tax. The rental income you earn in Nevada will be treated as California source income since you are a California resident. Let's say you want to invest in other state with a lower tax rate, you have a file an out of state non-resident tax return, and get a state tax credit on your CA tax return (Form 540). Any form of income that you realize is going to be taxed in California because you are a CA resident. 

@Michael Batshon, You can accomplish what you want and do it without a lot of crazy machinations.  @Derek Dombeck is correct, your intent when you buy that property using a 1031 exchange must be to use it for investment.

But intent is not forever and can be changed.  The key is to do it in such a way that you do not give the impression that you were going to make it your primary residence from day 1.  How do you do that.

1. Actually rent it out for a period.  Nothing demonstrates your intent like actually using it for what you say you are.

3. Then later change your mind and move into it.

The $64K question of course is "how long do I need to use it before I can move into it".  There is no statutory holding period.  The snarky answer is "whenever you change your intent you move into it".  But if that's one week after you bought can you really demonstrate what your intent was when you purchased it???

@Marcy Moyer is correct there is a safe harbor from the IRS that says 2 years if a couple of other conditions are met.  But this is not meant to be a statutorily required period.  There could always be circumstances where a shorter (or longer) period of investment use would be justified.  There are a lot of folks out there who think an investment property on two consecutive tax returns is fine.  If your account is comfortable with the holding period then listen to them.

But don't give up and just pay the tax if you can be patient.  That just plain hurts my old midwest sensibilities!!!

Here is a good article about it

https://www.kitces.com/blog/limits-to-converting-r...

The IRS always looks at intent, and you have said that your intent is to live there. It does not matter if you use an entity or a trust or anything else. That said, you may get away with it for awhile......... but eventually, you will get caught. Probably when you are putting your home address on your tax returns and it matches that address.....

Good Luck

Derek Dombeck