All Forum Posts by: Curt Wortman

Coding on a sunny beach in Mexico was my dream back in 2000. There was great invention of WiFi back then allowing me to have my laptop not chained to a router with a long 50’ cable. I envision someday portability of the work location...

Tonight I hosted a Zoom call from my car at my daughters soccer practice with my iPhone setup as a WiFi hot spot. VPN access was working seamless to tunnel through the corporate firewall.

The paradigm shift is happening and corporate will be difficult to pull talented individuals back into the 6x6 cubes...

Make your personal legend in a location that inspires your creativity and drives you to work passionately at maximum productivity.

Where is your sunny beach?

Very well written and excellent data...

If there is a good deal I would personally take advantage of purchasing now. It is very difficult to predict the future given the uncertainty to perfectly time the bottom of the market. What is certain is that interest rates will increase above today’s historical low and there is a high probability of future inflation. Don’t get caught by recency bias that there will be a replay of 2008. There is a lot of irrational behaviors in the stock market and real estate is a much safer investment vehicle as we near end of 2020.

Will the tide go out before the tidal wave of inflation?

I’m always searching for a good location and Asheville is an opportunity for long term appreciation. If you see a good deal and need an investment partner to make the purchase decision easier, message me.

Painting it to the latest trend colors will draw more demand for the rental. I would go for the cheaper labor assuming they are experience and will do a good job. Getting references or using referrals is best. A contractor would likely hire out to subs...

Thanks everyone for the replies and input. 

Thanks @Dave Foster and @Katie L..

My understanding is that I will need to covert my primary into a rental property then hold for minimum of 2 years before IRS considers it a qualified 1031 exchange. This pushes me to most likely 2023 before selling with is a long wait given the economy. I looking at $900K capital gains minus the $500K from 121. 

Bonus depreciation on cost segregation for a rental property investment my be a way to offset the capital gains if the transaction occurs in the same year? I'm not sure about carry forward and back capital gains/losses. Plus I'm getting a feeling that bonus depreciation might be on the chopping block at least on old construction for 2021 tax season. Government will need to review what existing program needs to be cut for funding their huge debt interest payments.

Seller financing would hold the payments even further delaying and immediate cash into rental investments.

Not sure if the above information is correct based upon my limited knowledge and whether there are other strategies to be considered.

I'm considering selling my primary residence and moving out of state... yes I'm from the amazing overpriced California. Before making any decision I'm researching what are my options for minimize the tax implications. I will be purchasing a property on the East Coast at a fair less amount taking any remainder gains and purchase rental income properties.

Background: I have lived in my home for 10 years watching the prices of house steadily climb. From my research on 121 capital gains exclusion, this would allow for $500K tax free since I'm married. The challenge is to minimize the tax penalty on the remainder of capital gains. From a simplistic calculation the remaining taxable income = Purchase Price - Sale Price - $500K from 121. The rental income of this California would be ~$4k/month which only covers existing mortgage and property taxes, therefore much better ROI for cash flow elsewhere assuming that appreciation would remain flat for the next few years.

My limited understanding:

1. If you live in the residence for 2 of 5 years, then I can apply for the 121 benefit. Check!

2. 1031 exchange could be used within the 3 year remaining. Proper handling of identification and conversion per the 1031 stated timeline would be required.

Do I need convert the property to a rental to take advantage of 1031 exchange? If so, then how long do I need to wait selling this newly converted rental property?

I would like to hear from the experts if they have any creative solutions to minimize taxes. I will be using a CPA in conjunction but there is a broad spectrum of knowledge in the forums that might result in some better options...

@Rick Pozos. Great recommendation to have them tie into assets to ensure repayment. 10% with a legal contract is much safer than 25% without legal binding. You are providing them lower risk for the loan almost a guarantee at 10%, therefore a lower rate makes sense as you are fronting the majority of risk.

@Philip Coiro. I agree that moving the money to self direct IRA instead of 10% penalty plus skipping the taxes is a fair better idea.

You can use self directed IRA to fund real estate investment. Make sure that you find the right bank to offer this program since not all banks will offer "true" self directed IRA.

@Joe Cassandra History repeat itself but we should understand that recency bias often make us think that the exact same results will happen but expect variation. The prices will drop but probably not to the level we saw in 2009-2012 as the banks are much more selectively in their mortgage qualification process.

A drop about 20-30% could be expected but the recovery will be much slower than our current bull market. We need to prepare no appreciation for 10 years into the ROI calculation.

30yr at 3.0%, 20yr at 2.875% and 15yr at 2.5% no points for $485K (personal home mortgage). 3.425% was quoted for $1M (60% LTV) as I'm may borrow more to fund new property investments.