All Forum Posts by: Buddy Holmes

Thanks @Bill B.

Just what I needed! No Refi needed, I left out the other sweet deal. I have an original HELOC on the home (now LOC) at .25% under bank prime!

I use for Cash buys and liquidity needs.  I like your answer and check on my sanity!

I have had my first rental too long. I admit I have this thing for it: 1000' to a great beach, my dream retirement home, a super long term tenant, a super appreciation.   But from a return on equity it is well out of balance. In terms of the 1% rule, it is now 0.3%. In terms of depreciation I've used 22 of the 27.5 years.   How about some ideas for a good exit strategy?

Thanks @Eddie L. 

Let me start anew and incorporate both replies.

How to Calculate new Property Basis in 1031 Exchange

Define terms:

Property sold (assume purchased w/o any 1031 Exchange)

P1 = Original Purchase price of property exchanged

TDP1 = Total Improved Property = P1 – LV1

DPY1 = depreciation to be taken per year (so TDP1/27.5 -- for SFH)

LV1 = land value when purchased

TD1 = total depreciation taken = DPY1* X

Where X = years of depreciation taken

S1 = Net Sale = cash to QI

G1 = Net gain to be deferred = S1 – B1

D1 = Debt paid off in sale

B1 = Basis of property sold = TDP1-TD1+LV1

=====================================

Property bought in 1031 Exchange w/o boot

Deferred Gain = G1

Deferred Depreciation Recapture = 0.25*TD1

======================================

1031 Requirements: P2 ≥ S1 & D2 ≥ D1

======================================

P2 = Purchase price of property bought

AC2 = Additional Consideration = P2 – S1

TDP2 = Total Improved Property bought

LV2 = land value of property purchased

D2 = Debt assumed in new purchase

B2 = Calculated Basis of property purchased

So just:

B2 = B1 + AC2

And

DPY2 = DPY1 for the next Y years

Where Y = 27.5-X (for a SFH) Is this correct??

Please define new variables if needed.

Thanks for the review so far and welcome the help of anybody!!

 I see your point and my error. I will correct the list and and post again with all advice I receive here.  I'm just an anal engineer, and would like to try to make one universal equation.  Cheers, Buddy

How to Calculate new Property Basis in 1031 Exchange

Define terms:

Property sold

P1 = Original Purchase price of property exchanged

TDP1 = Total Improved Property = P1 – LV1

LV1 = land value when purchased

TD1 = total depreciation taken (so TDP1/27.5 per year for SFH)

G1 = Net Sale gain = P2 - P1

D1 = Debt paid off in sale

B1 = Basis of property sold = TDP1-TD1+LV1

=====================================

Property bought in 1031 Exchange w/o boot

Deferred Gain  = G1

Deferred Depreciation Recapture = 0.25*TD1

======================================

1031 Requirements: P2 ≥ G1 & D2 ≥ D1

======================================

P2 = Purchase price of property bought

TDP2 = Total Improved Property bought

LV2 = land value of property purchased

D2 = Debt assumed in new purchase

B2 = Calculated Basis of property purchased = ??

Please define new variables if needed.

Help somebody!!

 Thanks

I picked up, in a talk about use of SDIRA for REI, a mention of using 1099 Income to allow contribution to a Solo 401K.

Does anyone have what kind of 1099 income might be so used?

I unfortunately invested in a student housing DST that went into Chapter 11 due in part to Covid and virtual classes.

I have to take MRD from my TIRA so I need to get the evaluation down to $0 so as to reduce the MDR.

Any Ideas?

Also since it is in a IRA anyway to take a tax credit for the investment loss?

 I agree.  I think in that case you could not do any work on the rental but have it out-sourced.  Also any loans would need to be from select sources who loan on properties partially or fully owned by IRAs.

I agree with Greg. Also I would get a second opinion of the time you have on the inherited IRA. I have heard that it is 10 years to cash out. They may be fraction due out each year but not all out in 3-4 years. Ask on the tax forum.