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I don't think it's a requirement that you depreciate the property. Your accountant would know for sure, but I think that's simply an option, and you could depreciate it over a longer period too, if you wanted to.
I know where you're coming from. I'm in that pickle now. I have a property that I'd like to sell, but it's completely depreciated, and on top of that, I refinanced it, so if I sell, I've got to pay off the mortgage in addition to 30% taxes (?) on the sale price. Got myself into a mess. I can't afford to sell it... at least not until I retire.
You do a 1031 exchange. Then end up with a property you can live in. Rent it a while and then live in it. After you own it five years and live in it two you can duck 250 K worth of taxes.
I don't think it's a requirement that you depreciate the property. Your accountant would know for sure, but I think that's simply an option, and you could depreciate it over a longer period too, if you wanted to.
I know where you're coming from. I'm in that pickle now. I have a property that I'd like to sell, but it's completely depreciated, and on top of that, I refinanced it, so if I sell, I've got to pay off the mortgage in addition to 30% taxes (?) on the sale price. Got myself into a mess. I can't afford to sell it... at least not until I retire.
You'll need to find a good income, seller financed property to get out of the hole if you lack equity.
I am really confused by your post. You are selling your investment house. You want to reduce the selling price by the amount of commission so you can show you made less money? Has the property itself depreciated?
Your post asks about the buyer paying the commission. So, now I'm more confused. You want to ask a buyer to pay all the commission out of pocket?
Can you explain better and use some real numbers.
My post is confusing because I don't know how a 1031 works yet.
Lets say I bought a property for $100,000 10 years ago
Comps are $200,000 now
Agents and fees are 5%
When I sell, do I need to buy a property with a minimum of $200,001 or is it $190,001 due to me paying agent fees?
Yes, I am asking the buyer to pay all of the fees out of pocket, this is an investment property.
If there is $40,000 in depreciation, my cost basis is now $60,000, my gains would be $190,000-60,000= 130,000. I can deferring all of my taxes with a 1031 by using the $130,000 towards a new property. When I buy a new property for $250,000, can I pay 5%,$12,500, towards the sellers agents fees and ask for a 5% reduction in selling price. If the price is $250,000 now and I want to do a 1031 in the future I'd have to spend over $250,001 versus $237,500. I'm concerned if interest rates rise and prices fall, it will become harder to do a 1031 in the future, so I'm planning now and trying to have a lower down leg price for the future.
I started another thread and people just suggest that I don't renew the tenant lease and sell it for more as an owner occupied unit.
Last edited by thelopez2; 11-26-2013 at 07:43 AM..
You do a 1031 exchange. Then end up with a property you can live in. Rent it a while and then live in it. After you own it five years and live in it two you can duck 250 K worth of taxes.
Hard to do in my case, I'd have to sell or rent my house, bought as a bad time, hard to keep and rent it out without losing money. Your idea has crossed my mind, but I'd have to sell multiple properties to do it, and I'm still considering it. Wife might not like moving every 5 years.
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