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Updated almost 6 years ago on . Most recent reply presented by

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Gregory DeRosso
  • Rental Property Investor
66
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What would you do? Probate and Capital Gains and Multiple Partie

Gregory DeRosso
  • Rental Property Investor
Posted

So here's the story. I'm asking for good friend who for some reason doesn't and wouldn't join biggerpockets after we were talking about how great REI is. He was asking me what I would do.

His father bought a multifamily under a private mortgage 42 years ago for about 35k. From what he knows it never had a refi nor money has been taken out. I assume his Capex averages to about 6% per year and the valuation today about 1.2- 1.3 million. Unfortunately his father passed away leaving the property divided in 4 ways.

Him 64%

Person B C and D 12% each.  

Right now the will is still being processed though the surrogate court but when it's all done He's not sure how to handle this.  

Option A try to buy out B C D after they pay their % of the capital gains tax if they're willing.  The question is what tax implications would He have if he pulled from his growing money market. I don't know what his initial investment is but he thinks it should be more than enough to cover it.  

Or

Option B 

Sell the property pay his % of the capital gains and reinvest.  He wants to know can he take advantage of a 1031?

Obviously, I don't know how to answer but maybe someone here does.  

Oh fyi, this is in the "tax haven" we call New York.... 

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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
13,509
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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
Replied

There is no capital gains tax for the sale of that property, not federal anyway.....heirs get a “stepped up” basis, as if they bought the property for market value. 

He needs to talk to a cpa, his probate attorney would know this too. 

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