All Forum Posts by: Noi K.

@Catherine Underwood

I am selling my SFH in Indio that I kept as a rental for too long. I suppose for short term rentals it maybe ok... but it was hard to get a decent rent and tenants (at least for me).

I shouldn't have asked this question in the same thread, but these were more "what if" questions on a different property. Sorry for confusion...

I have another property (Let's call it C). Because I am in the process of working with a lender (regarding the properties A and B that I asked about in the opening post), I am working on a rate and term refi on C.

A - I am selling and potentially exchanging.

B - I am doing a cashout refi and keeping the property.

C - I am doing a rate and term refi and keeping it for now. But lately thinking maybe I want to sell/exchange later this year. Nothing is decided but I just wanted to know what the potential pitfalls are.

Hope this clears it up. Your answers were definitely helpful - thanks!!

@Dave Foster I have further questions... I may be thinking too much, but my inquring mind wants to know...

1) Rate & Term Refi is fine, even right before 1031?

2) If you cashout refi right before 1031 (say $100,000) the worst case is that you get taxed on $100,000?

3) Even if you did cashout, will it make it ok IF you put all proceeds in, buy the new property that is at least $100,000 more than the net sales price of the old one?

@Dave Foster thank you again. yeah I left out the details like depreciation recapture etc. to keep it simple, but I will have loads of questions for you in that area next :)

But just quickly, let's say that since the sale of the 2nd property ends in a loss, there's no cap gain taxes or recaptured depreciation, 25% recapture of depreciation from the 1st property is still due? 

For ex. if I had $40,000 of total depreciation on the 1st property, and also $40,000 on the 2nd, what I owe will be $10,000 + $0 = $10,000?

@Nicholas Aiola thank you. I can't believe that you still make time to respond here actually... I'm here asking pros like you because my own accountant pretty much declared to be unavailable for questions until 4/15 is over :D

@Nicholas Aiola

@Dave Foster Thank you!!

Since I found this forum and started learning about 1031, I've reading your posts. So very helpful :)

Yeah the idea sounded weird at first, but it may work well for me (aside from my broker making extra commissions for his good idea). Definitely adds flexibility. Thanks again!

Hi @Nicholas Aiola , I just found this amazing thread - thank you!

I have a hypothetical question about 1031 exchange and taxes. Let's say I made $1M gain and exchanged into much bigger 2nd property, and decide to sell it at a loss of $1M.

In this scenario, there's no taxes due, because the capital gain from the 1st property was erased by the loss on the 2nd one?

Thanks for your reply, Edward.

Yeah if I have a better option, I wouldn't think of this. But here's why -

The property (A) I am selling has big negative cashflow, which is pushing up my DTI and thus preventing me from doing a cashout refi on another bigger property (B).

My mortgage broker has been working on the numbers, and one way he came up with is to deal with A and B at the same time. We'd cashout from B and payoff A with part of the refi cash. That way A's DTI problem is eliminated and I can cash out from B.

Originally I was just thinking to sell A, so it wasn't a big question. But now I am inclined to use 1031 exchange instead. I know that cashout refi too close to the exchange is no good, but putting more money into the property should be no problem for the IRS. More of my money will be locked in until I can get it out again as a loan, but that's another problem.

Hi, folks, long time lurker first time posting :)

Long complicated story short (I'll elaborate if anyone wants to hear later in thread), I may need to pay off the loan on a rental property I am selling to exchange.

Would there be any issue or disadvantage in doing that?

Once everything gets done, I plan to get a loan on the new property, close to the amount of loan I am paying off on the property I am selling. I know it sounds kind of silly... but would love to hear what you think.

Thanks!!