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I do appreciate those who took the time to offer suggestions. I know I get the stepped-up value of these properties so I'm not worried about capital gains.
At our ages, we are trying to eliminate stress and complications. I've already had 1 heart attack so I'm not interested in a 1031. Thought about that a few years ago but not now.
I want to make sure my inheritance is safe for our 4 children. Our 37 year old son was upset I decided to sell and I remember being that age and older trying to get my mother to take more risk but now I understand her aversion to that. Where you are in life certainly flavors your risk tolerance. Those apartments took care of my mother in her old age, are certainly helping me and my husband with ours and will be able to help all our children as well (if we aren't all blown away in a nuclear war in the near future).
We still have 2 sixteen year old kids to educate and it is important to us both that his 3 children from his starter marriage can make no claim to any of "my" money. Very unlikely they will but you never know.
What do I need to do if I want the mortgage paid off at closing? Just give the closing attorney all the info and that's it?
Location: Formerly Pleasanton Ca, now in Marietta Ga
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After you wrote your situation I would have never recommended a 1031 even though I'm a big real estate person. You're at a stage where you want life to be much simpler and I can totally see why you want out.
I have a butt load of rentals and only have a sister to leave it to. To me it's a cash machine and not much work. It has set me up for life. But like many people here it's not hercup of tea and while I have it set up well leaving it to her would probably stress her out.
After you wrote your situation I would have never recommended a 1031 even though I'm a big real estate person. You're at a stage where you want life to be much simpler and I can totally see why you want out.
I have a butt load of rentals and only have a sister to leave it to. To me it's a cash machine and not much work. It has set me up for life. But like many people here it's not hercup of tea and while I have it set up well leaving it to her would probably stress her out.
Exactly! And to top it all off our son lives and works in Kazakhstan! so, even though we've had the same manager for years, he would not be around to see anything an owner needs to see. Being an absentee landlord is not a good situation. Our wills are set up for him to be the guardian of the "little girls" and trusts for all the kids. Now, or when we close, the trusts will not have real estate except our current home. His argument is a good portfolio should have a good mix of stocks, bonds and real estate and normally I would agree but we are on the downstage of life and things look different from here.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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I'd still open up a 1031 avenue. You don't have to use it in the 45 day identification period and just let it expire.
And I would use the time between now and the 45 id period to thoroughly review your choices:
Checkbook rate =0% interest rate, $1mil in = $1 mil out.
Passbook Savings rate of (45days/364)*1%*1mil=$1236 interest plus taxes.
If you would do stocks (SP500), today 8/15, noon, that Index is down 1% or -$10,000 from the last night's close on the 1mil.
IOW, sit on the money until it freezes you rear or sets it on fire.
My advice to you is to talk to your tax advisor. Don't take $$ advice from strangers on the internet. But the guy who said if you pay off the mortgages you will in essence be giving your husband half of the inheritance as long as that's ok. And the value did step up, as you said, on the date of death so no capital gains issues.
About 12 years ago I inherited rental property. Duplexes built in the 40s, brick , 2 bedrooms, 5 buildings. They are paid for. My parents bought them in the late 50s and they are becoming money pits. It will only get worse. I am 72, DH is 78. I have been offered well over $1,000,000 cash for them by a flipper. I have done my due diligence and for many reasons decided to sell them.
They are in my name alone. I want to pay off a mortgage on our previous home which is in my and my husband's name. It is on the market now. I have some questions. I have written to our CPA with these questions but she is on vacation for two weeks and I'm asking here to get some ideas.
If I pay off the mortgage held by both me and my husband, will it be considered a gift to him and generate gift tax?
Other than that mortgage, we have no other debts, a comfortable situation with IRAs and other investments. Where should I put the money? Even for a few days I could lose some interest so I want to make sure I maximize my investment. The mortgage is held by the CU where our money market is. Should I deposit the cash in the MM and then pay off the mortgage? and then leave the balance in the MM? Should I put it in a s&p 500 fund? The closing is scheduled for the end of August. Any ideas would be appreciated.
I do appreciate those who took the time to offer suggestions. I know I get the stepped-up value of these properties so I'm not worried about capital gains.
Kudzu, if you have owned these properties for 12 years, you will probably face significant capital gains tax on them. The "stepped up basis" occurred at the death of the previous owner. From that date until you close, any appreciation that has occurred will be subject to tax. With that in mind, a 1031 may be worth considering. Your CPA should be able to advise you further.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
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Quote:
Originally Posted by Fat Freddy
Listen to no one, especially "Experts" and "Financial Advisors".
Cash it all in.
Take the money and run.
Don't stop running until you have spent every bit of it.
Leave nothing behind.
When your time on Earth is done, exit without leaving Footprints.
Is this like live fast and die pretty?
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are you braggin' or complainin' ?
