All Forum Posts by: Chrystal England

Hey Brandon Turner... I have 2 of the 3 qualities you are looking for.. 1) big hair 2) ugly convertible - if you consider a '96 black on black cobra ugly... But alas I do not know the ingredients to the secret sauce for success! In fact, I'm not sure I've ever properly defined it for myself ... As it seems to be an evolving concept as I age. I used to think success could be measured by whether you have the best car, house and spouse... But I find the more successful I get, there is always someone with a better car, house or spouse (although my spouse is truly the best!) Check out my quals on LinkedIn.... What I do have is some sort of genetic disorder called "a sometimes misguided passion for real estate investing" that at times interferes with other areas of my life. I can't seem to consistently control my disorder. It's like someone says real estate at the table and then I begin babbling about why everyone at the table should be a real estate investor. So.... I will be applying for the position you are posting. Mainly because having been an investor for over 20 years, having made my first million $ through real estate, and subsequently losing most of it in the 2009 crash, and now finally climbing out of that crisis through my day job as a CPA/consultant I feel like a lot of content has been missing out there for seasoned, survivor investors like me. We know how to buy an investment property, we know how to get a loan, and we know about 1031 exchanges and why they make sense and how to do them. We aren't learning anything new from these real estate blogging sites so it's hard to justify spending time on them and contributing to them, although I hold out hope do to the genetic disorder I mentioned earlier... Stay tuned....for some useful content for the intermediate/advanced investors out there that can help the newbies take their 5-6 property investment portfolio to the next level since you need a much larger portfolio than this to achieve true financial freedom.

Also I forgot to mention in my prior post here that one of my 1031 exchange transactions was also audited by the IRS while I was an IRS agent in San Francisco. Of course I was not concerned in the least about that transaction being audited, however, that was a particularly more complex transaction than most. Specifically, the relinquished property was an apartment building, and there were 2 replacement properties I had to purchase in order to use all of my gain. 1 of those replacement properties was a single family home, and the other involved raw unimproved land where I had a rental house built and I needed to use the full value of the newly built home in order for the 1031 to work. The replacement property that I was having built was completed and we closed escrow within 45 days of closing on the relinquished property. The IRS auditor said it didn't qualify as part of my exchange and tried to disallow a portion of the exchange as he was only using the value of the raw land in his calculation. Obviously he was clueless about 1031 exchanges and I appealed and won. I also recall others in my office trying to disallow exchanges and I was constantly having to explain why the exchanges were qualified... Pretty amazing stuff!

I'm a CPA, Broker, and former IRS agent in San Francisco's large case division. I've done several of these including partial 1031's, multiple property 1031's, having a property built as part of a 1031, and have investigated the rules of a reverse exchange, but generally finding their costs far outweigh their benefits in cases where you want to purchase a replacement property prior to selling your planned relinquished property. Additionally, the new tax rules surrounding converting an investment property into a primary residence with the intent of excluding all of the capital gains someday have really put a damper on my previous tax planning strategies for rental properties. In general, 1031's are one of the last legal tax shelters in existence and they are wonderful. However, the more interesting part of this tax strategy is in figuring out how to permanently defer the gain vs the temporary deferral that the Internal Revenue Code offers only up to the point where you finally divest of the property and must pay the piper so to speak... I think investors are ready for such a book title as... "Life after a 1031 deferred tax exchange-now what?" Which I'm happy to collaborate on with anyone who is up for that with me. Cheers!

Agree with Dion DePaoli's comment. It may differ by state but when I've done seller financed deals in California and Arizona, once I'm in contract and ready to execute the deal, the title company handles 100% of the title and note recording/execution. Generally that same title company will also service the note and you will make payments directly to the title company. As the buyer, if there is any existing debt on the property that will remain after close of escrow you will want to be sure that the services and not the seller will be responsible for making those payments going forward. Otherwise you run the risk of a surprise foreclosure if the other liens go unpaid.

Do you own other property that the seller can agree to loan you the 10% back simultaneous on close of escrow? I've done deals like this and they work great if you have equity in other property that is attractive to the seller. Additionally, the seller can do what's called a "partial" 1031 exchange... In your case for 90% of the sale price is eligible based on your proposed scenario. Lastly, on the 10% carry back, the seller will only be taxed on the proportional gain on those dollars, as you repay them and not all at once... So translation... His gain will be very minimal each year, depending on note terms, and essentially his gain will be amortized over the term of the note. However, if he has other more attractive offers none of what I'm writing here matters. Best of luck to you!

Sorry last post I misread and thought you were referring to a DTE (deferred tax exchange) so my answer isn't relevant :-)

No restrictions. I've done this many times. An RLT is no different from you from a tax perspective, so the IRS doesn't care.

Put the replacement property in contract and make the close of escrow contingent on the sale of the farm if the seller will agree. You can give them earnest money that can be refunded to you at close of escrow of the farm or if the farm ends up not selling within whatever time frame the seller will agree to then you can agree in the contract that they can keep it for their time and energy. The LLC game you describe won't fly in an IRS audit (I'm a former IRS employee from large case division and a CPA so I know). It's so simple to work with a real estate agent and find an additional property as well to avoid tax on the balance of your gain... Truly... Or alternatively you can also use the leftover boot to build an additional structure or add improvements to that property you plan to buy provided you complete all those improvements within the 180 day deadline. So if you are thinking of moving into the replacement property some day, just do some or all of those improvements within 180 days of your close of escrow on the relinquished property. I've done this, and passed an IRS audit on it. It works. Anyway good luck!

I say put the offer in on the replacement property... Lock it up, make the purchase contingent on the sale of your investment property (if the builder will let you). Then get your other property listed and sold. If you are in s good market (I'm in the San Francisco Bay Area and average days on market are around 30-45 right now if priced right). If the builder won't let you put in a contingent offer then just put in a normal offer, conditioned upon obtaining financing which is standard in any contract. Reverse Starker Exchanges are very pricey and complex, so if you really want to "trade up" into something else, just sell your property first and simplify the whole thing saving yourself big $ and big hassle.

The short answer is yes. Provided the four plex was not used as your primary residence recently. If it was used as your primary residence for 2 of the last 5 years (not necessarily consecutively) then you won't need to do a 1031 exchange and can instead enjoy a tax free gain of up to $250k if single and $500k if married. If the 4plex was strictly used as a rental then the only other primary requirement is that the replacement property be of equal or greater value (some other more specific details will apply of course depending on your mortgage amounts involved, etc so ask your exchange intermediary for more details).