All Forum Posts by: Damian S.

My dad and his partner do these jobs regularly, but they probably wouldn't be able to get to this until spring. I can ask though.

@Dennis Montai If you did not have a buyer's agent who helped procure the sale then it was the listing agent's efforts that got a buyer. Essentially they would be entitled to the full commission and if they choose to lower it it's their call. 

@Nikki Kofkin You are essentially getting free money and I like that you are putting the money to work. In the mean time you will be receiving some free cash flow and by the time you have steady income you can refinance the condo and put the money in another property. All this while you will be saving additional cash. I say go for the deal with the highest cash flow and chance of appreciation.

So you represent an 'institutional buyer' moving into a new market and are asking for recommendations on a board? That's ridiculous to me

Robert - Some custodians are more willing to let prohibited transactions be corrected if it is a situation that may be easily corrected, others will distribute the assets and mark the 1099 with a special code for prohibited transactions. Sound like you found yourself a strict custodian.

Thank you, I needed to make sure this would not qualify as some kind of a special case where you have both a principal residence and business property. I guess we will have to get her a new accountant, preferably a CPA this time. 

Also, one last question. In order to have a proper paper trail should we make sure she has an appraisal done as soon as possible to coincide with the passing of my grandfather? Or, if we we sell the property within a reasonable time frame, will that be enough proof for IRS that the half interest that my grandmother received had been worth half the sale price at time of sale. 

@Lance Lvovsky Thank you for your response, really appreciate it. They owned the property as tenants by the entirety. My grandmother is leaning towards selling the property as it is proving to be too much hassle. The thing is that her current accountant seems to think that only the half of the principal of the residence portion would receive step-up basis and she would still be on hook to pay tax on the full recapture of depreciation thus far taken on the remainder or 75% of the original basis. 

Is your custodian aware? If yes, you will have to work with them to correct the situation. Otherwise you are risking having your account flagged and then dealing with the consequences.

My grandmother recently received my grandfather's half interest in a 4- flat as the surviving spouse. One of the apartments had been used as their principal residence and continues to be used by my grandmother. The remaining portion of the property or 75% had been depreciated for the past 16 years. Now my question is whether after my grandfather's passing half the interest in the property received a step-up in basis or just the half interest in the principal residence portion. The property is also not located in a community property state. Thank you in advance for input. 

@Anna R.

Since you have not lived in your current property for at least 2 years you will not be able to receive a full tax writeoff for up to $250k on any profits realized as a single person if that's how you own the property. In your case if the property sells relatively quickly you could potentially receive roughly more than half of the profit tax free if thats your primary residence (14 - 16 months divided by 24 months). I would look into making the necessary changes to make sure you receive the homeowner exemption if you purchased the property in your name.

If you are purchasing a property in an LLC you will want to hold it for at least a year to take advantage of the long term capital gain treatment on gains. Otherwise if you are going to be flipping and selling within 12 months I would look into setting up an S Corp. Now you have to be mindful of the fact that loans for entities are a whole different ball game.

You also stated that you just flipped the property, but since it's still on the market I wouldn't technically state you flipped it just yet :)