All Forum Posts by: Neetu Dsouza

Here is my situation -

I made significant losses on 1256 contracts this year and here is my sample scenario.

2022 year
- Long term capital gains - 24,000
- 1256 contracts losses - 140,000

2021 year


- long term gain - 110,000
-- 1256 contract losses - 28000

I had paid taxes on the long term gain last year and wanted to see if you could possibly help me understand this carry back rule and if in any way I would be eligible for the carry back.

Here it what it says on the IRS site -

The amount you can carry back to any prior year is limited to the smaller of:
• The gain, if any, that you would report on line 16 of Schedule D (Form 1040) for that carryback year if only gains and losses from section 1256 contracts were taken into account; or
• The gain, if any, reported on line 16 of Schedule D (Form 1040) for that carryback year.

I didn't have gain on 1256 contracts but did have overall gain on schedule D. Will I be able to carry back the losses even though I didn't have 1256 contracts gains?

Thanks for your help!!

I am mostly not worried about risks about maintainance costs and such. What really worries me is the kind of tenant I get and dealing with them...and the eviction process if needed.
Do manangement companies take care of this? Or are there any other companies that deal with situations like that...
I want to understand what kind of risk I could possibly be looking at...For eg. If don't get the rent on the due date...how soon does the eviction process start and how long could it possibly take for getting the tenants out.

I think I understand that most people here are looking for or getting closer to 2% rule.
For me I have cash sitting in the bank with no returns. With money so cheap I thought that I could buy a few properties with 25% downpayment and even with minimal cash flow I would have equity on those properties which are essentially being paid by tenants.

Thanks Jon an mck. How feasible is it doing investments in far away cities and using management companies for maintainance?

That is a wealth of information. Thanks everyone for your responses. I think if I buy the 1st property I'd be ok on the maintainance and finding tenants.
My biggest fear is the quality of tenants I would find in that area and the eviction. I have absolutely no experience with that. That's why I was inclined towards a better neighborhood...but I could by no means get something less than $160k - $170k.
Are there really any markets in the east coast where you could get to the 2% rule??

I know a lender who I refinanced my house with 3 times in 2 years ($0 closing cost)...My credit score is in 800s so I should not have problems with the loan. Townhouse is in very good condition and need no repairs. My realtor though suggested to put a toilet in an area where plumbing is already hooked up.
Even in far suburbs of DC in Frederick county townhomes are not less than 150k.. So I am not sure what areas could I possibly find something less than that.

Thats the lowest I can find and in not a very good area. I still figured that with interest rate being so low I will be paying about 450 in mortgage, 50 in HOA, 250 in taxes and insurance, 50 in maintainance.
I will still be making about $700.
This property was last sold in 2005 for $272000.

l live in Montgomery County Maryland where the property prices and rents are on a higher side. This would be my first investment property if the offer gets accepted.
I am looking at 2 properties:
1. I just went and looked at this townhome which is listed for 120k. It is a foreclosure townhome and the property is in very good condition. My realtor told me that I could get about $1400 - $1500 mo. The neighborhood seemed really shady. I was really hesitant when I looked at the people in that community.
2. Another property that is listed as short sale for $170k. It is a newer townhome in the suburbs and rent would be about 1400 - 1500 also.

It is a huge difference in price and I am not sure if any of above seem like a good option.

Thanks for your help.