All Forum Posts by: David Green

@Michael Pepe  thanks for your reply.  That is how I felt too.  I have not had a single day of vacancy in 5 years.  It is very easy to rent and I am unable to show it.  I will reach out to you if they come back with a "no" from my last request.

IMHO it is pretty shady for insurance companies to not payout loss of use under the vacancy rule.  It's not something I knew about, and I suspect most people are not aware of it until they get burned (no pun intended).  This creates a huge risk for anyone simply turning over a property which for some properties is 10% of the time.  So basically 5-10% of the time they can deny your claim.  

@Derek Lacy thanks for your comments.

It's a pretty messy situation.  The place had one month left on the lease.  Insurance did pay out that one (last) month of the lease.  They say they don't have to pay more since I do not have a current lease in place.  

Also, I had let the tenants move out early prior to the fire, but never cancelled the lease.  That said, there was nothing keeping the tenants from exercising their right to turn the lease into a month-to-month (albeit unlikely).

I mentioned this to the supervisor, but he suggested that line of reasoning would not get approved.

@Derek Lacy you are correct, it is just a rental dwelling policy.

 They insurance company picked the restoration company, the smoke damage is all covered under the condo policy due to bylaws.  They couldn't work on my unit until permits were pulled due to some detail the fire department noted.  

They are denying because they say it is "not rented now" (lease expired) and hence I am not actually recognizing a loss.

@Thomas S.  Below is all the language in my policy that refers to Loss of Use

OUR PROMISE—Loss Of Use Coverage

No Deductible Applies

These coverages are not limited by the expiration of this policy.

“We” will not pay for loss or expense due to the cancellation of

any lease or agreement.

This coverage does not apply to loss caused by “fungi,” wet or

dry rot, or bacteria other than as provided under ADDITIONAL

PAYMENTS, Fungi, Wet Or Dry Rot Or Bacteria Coverage.

Fair Rental Value

If an insured property loss covered under PROPERTY

PROTECTION—SECTION I, OUR PROMISE—Dwelling Coverage,

OUR PROMISE—Other Structures Coverage or OUR PROMISE—

Personal Property Coverage, makes “your” “residence premises”

uninhabitable, “we” will pay for “your” loss of normal rents

resulting from the loss, less charges and expenses which do not

continue while the rented part of the “residence premises” is

uninhabitable. “We” will pay this loss of normal rents only until

the rented part is habitable. These payments will not exceed a 12

month period.

The fire was in the common area, my unit got smoke damage only, but the the city permits took a while to get.  I only had about a month left on the contract.  I have talked to them a few times and keep pressing.  I told them that a the lease should have rolled into a month to month, etc.  I don't know if I will get anywhere with that line of argument.  I also thought about trying to argue that I had a lease in place at the time of the loss and I was unable to show the unit due to the loss so they are liable for loss of use post lease.

I wonder if there is some gray area or is this black and white?

I have a condo that had a fire and the insurance company only paid out the reminder of the current lease.

I am unable to show, lease, or sell the unit while it is being repaired.

Does anyone have any advice on how to convince the insurance company to continue paying loss-of-use?

Any help or advice would be appreciated!

Thanks, that clears it up for me!

 @Dave Foster thanks for the info.  Just wondering, how does depreciation recapture work on your primary residence.  The same as a rental or does it not apply? 

@Dave FosterThanks so much for that response!

It sounds the number of years I rented the original property does not have any bearing on calculating %TaxFreeGain on the 2nd property.  

If I were to roll over 60K in gains over into a new property that cost 300K and sold it 10 years later for 400K I would only have to pay capital gains on 80% of 160K?  Rent 2, Live in 8. 

Tax implications of a 1031

I am trying to understand the tax implications of doing 1031 exchange on an investment property.

I have an investment property that I lived in for 8 years and then rented for 5.

I will have about 60K in gains and I depreciate about 5K/year on it.

I am considering rolling it over into a larger rental and then slowly improving the property.

Do you have to pay depreciaion recapture and capital gains on the years that you lived in a property or only the years that it was rented, if you do NOT qualify for 2-of-5 rule?

If I move into the 2nd property after a few years, how does the "capital gains tax exclusion" work with the liability that gets rollod over in a 1031?

Any advice or guidance would be appreciated.

Thanks