All Forum Posts by: John Woodrich

I also recommend reaching out to @Brad Schaeppi at his website to schedule a consultation https://minnesotalandlordlaw.c...

I suspect the seller waived disclosures and you both signed that they were waiving disclosures?  If so you may be out of luck.  You would essentially be purchasing the place as-is and your inspection was to be relied upon.  Unfortunately - many inspections are rather worthless.  

Both the previous owners owned it without ideal grading.  This may be an item that is an expensive fix but don't overall limit the enjoyment/use of the property.  

To qualify for the Section 121 gain exclusion you have to live there 2 out of the last 5 years as your primary residence.  This is based on days, not tax years so Tim is correct in that you can't rent it for 3 year and then sell it.  You are too late.  

As you can tell Tim is well versed in financing strategy, I would recommend reaching out to him so you can figure this out.

@Jake Williams you can do this with a non-taxable exchange but it is a somewhat complex transaction and it isn't something that can really be explained on a forum.  Talk to your tax advisor/CPA about this and they can help you out.  If you have been dealing with things on your own you will likely need someone to help you as you begin the partnership with your brother.  Partnership taxation is far more complex than individual or taxation for corporations.

I agree with @Tim Swierczek - I would probably keep that deal for yourself, take out a HELOC before you move out, and invest with him on the next one.

If you chose to get him in on the one you are finishing and want to stick with your plan - there are a couple ways to handle it with varying tax implications based on the facts and circumstances.  However this isn't really a good topic for an online discussion as the tax consequences related to partnerships and partner capital accounts are very complex.

@Tim Swierczek can you help with this?  I suspect it may need a form of commercial financing?

Gift is based on the FMV of the asset being gifted. A gift with a $50k gain would be over the annual exclusion amount. As I mentioned, you may be able to file a gift return to report the gift but it has to be a gift. If you gift the money back to the original person tax evasion is pretty clear.

I had someone who wanted me to file a return with a gift of appreciated property, transferred via a QC deed.  Grandson sold it a month later, no gift tax returns were filed and I heard mentions of it being more of a loan to the grandson.  I wasn't going to put my name on the returns.
  

@Jeremy L Riddle the person who is preparing your tax return can help you two with this discussion.  If you are preparing your own partnership return you are on your own and will need to pay someone for a consultation.

Tax avoidance can get you jail time.  As Michael mentioned, you may be able to gift the property but in most all instances the gift needs to be reported.  Auditor will look at the facts and circumstances, there isn't a "loophole" here. 

This will largely depend on the city as some cities don't even require rental licenses but using for a non-permitted use is likely a misdemeanor.  Zoning doesn't care about rental ordinances so you will have to talk to someone in building or in a smaller town maybe the city administrator who is familiar with city code.

If Mpls - you can live in one unit and rent the other two.  From what I understand you currently can't use it as a triplex.  You may be able to convert it to a triplex under the 2040 plan by adding fire barriers but a triplex is commercial building code.  Duplex is residential building code so they are built to different standards.  Maybe someone with more experience in Mpls will chime in.

First step here is to call the city and talk to them about it. It may have been a prior permitted use and is grandfathered in but you don't want to value a property as a triplex and be stuck converting to a duplex or having a vacant unit. There are many properties in Mpls that have this issue, it is up to the buyer to understand the permitted use for the property. Duplex with a non-conforming unit or ADU is not the same as a triplex.

Good luck.

"Where" will depend on a lot based on the investor's goals as there is not a unicorn city that has affordable housing, no crime, high cash flow and high appreciation.  You are going to have a tradeoff with these.  As an agent you have to understand their goals and appetite for risk, then you can (hopefully) help find them something that fits there needs.  You may also find that your client is looking for a unicorn and may decide it isn't in your best interest to start the hunt with them.

As far as data goes - I don't think you will find one source of information that combines the items you are looking for.  Would be a great tool and likely a paid subscription.  If crime is the biggest concern many cities have crime maps available but that wouldn't help you compare cities https://www.minneapolismn.gov/...  Also some crimes may be more concerning than others which really points to this being more about the client's preferences.