All Forum Posts by: Eric C.

Every time I see "Sold "AS IS", I get worried about the property and expect a huge discount.  Why bother putting this in the listing?  Put it in the agent private remarks section.

Originally posted by @Peter M.:

But you could just view potential investments with a realtor which would count as business, you don't actually have to own property there.

Not true.  The cost of researching a new property is not a deductible rental expense.  These are considered acquisition costs to be added to the basis of the property. 

@Kevin Smith Yes, I have been to cities and quite a few times to Mexico in general.  It's funny that you used Inglewood as an example city that you consider dangerous, but in reality is not.  This is the same point I am making.  Potential tourists from other countries only hear headlines which generate a great deal of fear and uncertainty.  This causes them to think twice about going to Tulum or PDC.  Tourists getting murdered is probably one of the worst headlines a potential visitor can read.

Right so what I would owe would be the tax liability on the deferred gain. This is what my understanding is. However, my CPA calculated the deferred gain to include the higher priced property I exchanged into. 200k original price. 300k sold price 40k depreciation Replacement property $400k Deferred gain amount is $240k. (I did not include fees and commissions to simplify the numbers.) If I just sold the property I would have paid taxes on 100k gain and 40k depreciation recapture.

Depreciation recapture is 25%. This is huge for high income individuals since they benefited at higher rates when they took the deduction.

On 8824, Line 24, Deferred gain amount.  Is this amount the tax I would have owed if I just sold the property and didn't do a 1031 exchange ((ie. capital gain amount + depreciation recapture) - (closing costs and fees))?   

Lots of negative news headlines recently - "14 people reported killed in 36 hours in Cancun near tourist destinations".  "Cancun: From thriving paradise to murder capital?"  "American family vacationing in Mexico died from gas asphyxiation"

What tourist would want to vacation in Mexico after reading this?  

@Michael Plaks Would the deduction be taken at 50% of IRS per diem amount?

Another interesting point with depreciation recapture is that the rate is 25%.  However, when you take depreciation, it could have reduced the highest bracket of income (ie. 39.6%).  

Is it possible to use IRS per diem amounts for both meals and lodging when visiting OOS rentals for allowable business related activities?  I just want to simplify my record keeping and don't want to keep track of every little expense.