All Forum Posts by: Dominick Austria

@Pankaj Kumar if you want to take the money you have to pay the tax. With the 1031 you’d have to reinvest the entire proceeds if you want to defer all of the tax. For the Opp zone you’d need to invest the capital gains which sounds close to $130k. You don’t have to do the entire amount you could choose to defer a portion of it. You don’t need to be an accredited investor. Speak to a financial advisor if you want to find a opp zone fund. Also, the portion you’ve depreciated won’t be taxed at capital gains rate. It will be taxed at a max of 25%. You should speak with your CPA about your options and how to achieve them. 

@Jake Langley I was thinking to myself, where in the world is he going to buy real estate for $50k in Vegas. If you enter into a part ownership on a multifamily, make sure you understand the tax implications. You may have entered into a partnership which means you will receive a Schedule K-1 from the fund. Good luck! 

No, you cannot deduct the price of the home. Depending on the structure of your business you will be able to deduct some expenses. Talk to your CPA about what you can and can't deduct.

@Jay C. Unfortunately, marketing/copywriting for a a RE company is not considered to be an activity in line with a real property trade or business. It would be more in line of marketing. Another caveat to the the real estate professional rule is that more than 50% of your time worked is in real property trade or business. This means that if you have another job in say, marketing, that is greater than 750 hours a year, you will not be considered a RE professional.

@Steve Maginnis You can't reset the depreciation on the property. However, if you do a cash out refi and use the cash to improve the property that will be capitalized which is depreciable. If you do the cash out refi and use it for college tuition, this would be considered personal use. The portion used for personal expenses will not be deductible.

@Matt Ferch If you were to leave your job or be laid off, the 401(k) loan will be due in full by the tax return filing date. If you do not pay the loan back, then this will be considered an early distribution. You will assess a 10% penalty on the balance. I know you probably do not forsee leaving your job, but I think that should be taken into consideration as well. There is more risk associated with the 401(k) loan as opposed to a regular loan.

@Jake Langley If you do a cash out refinance, be sure to use it towards other real estate. If you use the cash to pay off other debt or take a vacation, the IRS requires you to allocate interest expense based on personal use and business use. On a $50k note the interest won't be much, but this could cause other issues.

@Wayne Brooks you are correct. If she didn’t move back into the rental the period after will not be nonqualified use. But I only know the facts that were given and I do not want to give bad information if other facts were omitted. 

Also yes they could file married filing separately. But if they want to exclude more than $250k they will have to wait. Also other factors might play into whether it would be more beneficial to file separately. 

@Joshua Thompson Yes you are correct. The period after the last day the property is used as a primary residence within the 5 year period is not considered nonqualified. And yes they will have to recapture the income. 

On Condo 2, the entire gain will not be eligible for the personal residence exclusion. you will have to allocate between qualified and non qualified use to determine what the exclusion is. The max that will be excluded is $250k because your wife lived in it for 2 years but you did not. For Condo 1, if you want to exclude up to $500k you will have to wait until May 2021 since your wife took the exclusion for 2019. If your gain on the property is less than $250k than you should reach out to your CPA and see if it would be better if you filed as married filing separately for 2019.